The Financial Conduct Authority will give firms space to innovate in the interests of consumers, according to the regulator's executive director of strategy and competition.
Speaking at an event in China, Christopher Woolard said the freedom the watchdog would give to the companies it regulates to try new things did not amount to a “free-for-all”.
He said the FCA faced a “balancing act” of trying to maintain high standards while making sure those standard do not stifle innovation or deny access to new participants.
Mr Woolard said: “We have no intention whatsoever of presiding over a free-for-all, and a thriving innovation culture does not mean a regulatory Wild West. So it is vital that we prepare firms who want to enter that system.
“When it comes to innovative firms, we’ve aimed to streamline this process through our Innovation Hub.
“Through direct contact with our team, innovators looking to enter the market have access to fast, frank feedback on the regulatory implications of their concepts, plans, and choices.”
A thriving innovation culture does not mean a regulatory Wild West.Christopher WoolardMr Woolard said the FCA’s regulatory sandbox, which allows firms to pilot innovative products and services, was now the largest of its kind in the world.
The launch of the sandbox unit came after the regulator came under fire from Harriet Baldwin, the economic secretary to the Treasury, for making innovation difficult back in September 2015.
Ms Baldwin said a start-up that wanted to enter the automated advice space was told it would have to ask consumers 247 questions to comply with regulation.
She said a ‘sandbox’ for innovation in this space was required that could be a “safer space” for firms to experiment with ideas for consumers without the full burden of regulation.
Mr Woolard said some of the products coming through the sandbox are at the “very cutting edge” of the financial services industry.
Mr Woolard said: “This sits at the intersect between the two cornerstones of our approach: competition and consumer policy.
“When these two work together a ‘virtuous circle’ occurs: firms enter, innovate and compete hard to meet consumer needs, while engaged, informed consumers distinguish between good deals and bad, and vote with their feet accordingly.
“And it is regulation that can give consumers the confidence to participate in the first place.
“Putting consumer protection front and centre of our innovation agenda doesn’t mean stifling innovators.”
His comments come a year after HM Treasury announced it was investigating whether the Financial Conduct Authority had been providing enough support for firms seeking to innovate in the financial services sector.
When asked what he thought of the FCA;s attempts to support innovation in financial services, Jeremy Edwards, a partner at Martin Redman Partners, said: "We have been looking at some apps that are designed to link to clients' accounts and the restriction doesn't appear to be the FCA."
damian.fantato@ft.com
