Advisers' response to Project Innovate

This article is part of
Guide to making Project Innovate work for you

Chris Hannant, director general of the Association of Professional Financial Advisers, comments: "I think there have been some firms which have engaged, but I do not think it is widespread."

Other respondents have seen a positive response over the past couple of years, as firms from within and without the UK have approached the FCA for support in developing cutting-edge technology to improve the customer experience.

David Geale, director of policy for the FCA, calls the response "fantastic", and not just among the largest companies but across the range.

He says: "We have seen a fantastic response from the industry following the launch of Project Innovate. We've also been encouraged to see all different types and sizes of firms working with Project Innovate, from big banks to small start-ups.

"Firms from outside the UK have also approached us for support, which underlines the industry appetite."

Scale of response

How many firms have so far engaged with the FCA for support from Project Innovate? Figures from the FCA reveal: 

  • 683 requests for support sent to the Innovation hub in the 26 months to December 31 2016.
  • The FCA is in the process of providing ongoing assistance to 348 firms (51 per cent of the total who applied).
  • Of the 355 firms which did not meet the criteria, the FCA provided either limited support or an explanation of why it could not help.
  • There were 69 applications to the FCA's Regulatory Sandbox. The first cohort of firms going through to the FCA's Regulatory Sandbox have been accepted to develop towards testing.
  • The second round of applications closed on 19 January 2017.

The range of companies currently going through the FCA's testing stage - the Sandbox - is wide. According to Mr Geale, these represent everything from payments to insurance.

Mr Geale adds: "We were equally impressed with the industry interest in our advice unit, which provides regulatory feedback to firms developing automated advice models that seek to deliver low-cost advice to consumers."

The FCA received 19 applications as part of the first cohort, which closed on 1 July 2016. Nine firms were successful and are currently being worked on with the FCA. The second cohort closed for applications on 3 February 2017.

Gillian Roche-Saunders, head of venture finance at regulatory consultancy Bovill, comments that the first "surge of applications" back in 2015 was "encouraging".

She comments: "Innovation in finance is paramount to ensuring the UK remains competitive, and the fact so many firms are engaging with the FCA is a good sign.

"The regulatory framework and procedures here in the UK can be a little daunting, especially for smaller firms, so it is great that access to FCA support and guidance has been improved."

Government response

On 1 March, the government also unveiled its digital strategy, which included more than £17m of funding for UK universities to carry out artificial intelligence and robotics research.

Mark Grimes, spokesman for technology provider eValue, comments: "Artificial intelligence holds a wealth of potential for the financial services sector. It will revolutionise the way consumers are informed about their financial options and enable them to financially prepare for their future.

"The government’s Digital Strategy announcement looks set to bring AI further into the mainstream, a welcome move to further promote the sector and encourage greater understanding of the potential it holds.