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FCA fails to meet expectations of robo software developers

FCA fails to meet expectations of robo software developers

Software firms seeking to enter the robo-advice market have been disappointed by the Financial Conduct Authority’s Project Innovate, according to Mark Spiers.

The head of banking, investments and lending at regulatory consultancy firm Bovill is working with a number of software firms interested in moving into the nascent automated advice market.

He claimed the would-be new entrants have not been encouraged by the approach of the regulator.

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Mr Spiers said: “I think some of the new entrants would want to see a more collaborative approach, but have not processed the fact that the FCA is a regulator, not a consultancy firm.”

Their expectations have been raised by Project Innovate, which was launched by the FCA in October 2014.

The sandbox project, which allows businesses to test out new, innovative financial products, services or business models without incurring all the normal regulatory consequences of engaging in those activities, has involved 500 firms.

The Financial Advice Market Review also precipitated a new ‘Advice Unit’ within the FCA, focusing on the development of automated advice, due to be open for business from May.

Mr Spiers said he had “quite a few” clients who were working towards some form of robo-advice, suggesting a demarcation between those that have worked in financial services in the past and see this as a new and interesting area and those people who are specific software providers looking at this as an area where they can add value with their expertise.

“Some of our larger clients are seeing some potential pressure from new entrants who want to reduce costs and are looking at a robo-advice solution.”

When asked to respond to criticism from software providers that the FCA has failed to be “collaborative”, a spokesman for the regulator said through Project Innovate it has received 488 requests for support and supported 53 per cent of these firms.

Those it did not support were generally because they did not meet its eligibility criteria and in some cases because the idea was already established.

“We ask all firms that approach us to fill out a survey and tell us about their overall experience of the Innovation Hub, from the responses we have received 73 per cent have said their experience was good or excellent,” added the regulator.