A “large number of respondents” to a Financial Conduct Authority consultation on innovation stated that the availability of individual regulatory guidance would be central to the success of its much vaunted ‘Project Innovate’.
The FCA received 69 responses as part of its call for input and today (28 October) published its feedback statement on the initiative aimed at helping both start-ups and established businesses bring innovative ideas to financial services markets.
Consensus among stakeholders came around how the project could most usefully address the majority of their concerns around regulatory uncertainty.
Respondents thought ‘guidance’ should be offered to individual businesses, whether regulated or unregulated, about which rules are applicable in given situations, how specific rules should be interpreted and whether a proposed approach is compliant with these rules.
The FCA confirmed earlier today it will provide businesses who qualify a dedicated contact for innovation-related queries, offering individual guidance as well as other services as part of an ‘innovation hub’.
The hub, launched today, will provide direct support from a team of dedicated FCA staff to both regulated and non-regulated innovators. Businesses will need to show that their innovation could bring benefits to the end consumer, either an individual or business
The FCA’s call for input also revealed most stakeholders were concerned that the regulatory regime does not provide innovators with sufficient legal certainty.
Problems included the complexity of financial regulation, difficulties in interpreting individual provisions, and issues in identifying which rules are applicable or which activities are regulated.
The FCA stated that while acknowledging complexity, it still expects businesses to make a reasonable effort to understand financial regulation, including the relevant parts of the handbook, and how it applies to their activities.
The regulator said it will identify themes emerging from the individual guidance and informal steers it provide’s and comment on them publicly as appropriate.
Many respondents felt that addressing regulatory concerns often means having to pay considerable sums for legal advice and consultancy services to attain a level of certainty that allows them to participate in the market.
There were also a “significant number” of complaints about EU regulation creating an additional layer of complexity, with a few respondents suggesting that the FCA could help to mitigate this by communicating intentions regarding implementation at an earlier stage.
Finally, many innovator businesses said that the FCA’s website was inadequate for checking on regulatory updates.
This criticism did have some direct action, with the regulator creating an innovation section of its website, which will be further developed in the coming months with new functions added.
peter.walker@ft.com
