The FCA and the next phase of Project Innovate

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On the 10th of April, Financial Conduct Authority (FCA) Executive Director of Strategy and Competition, Christopher Woolard delivered a speech (later published on the FCA website) regarding the next phase of Project Innovate.

Project Innovate, in the FCA’s words:

“Aims to tackle regulatory barriers to allow firms to innovate in the interest of consumers”.

The speech covered several areas of development and success. Overall, the content was very positive and optimistic detailing areas of progress. Discussed below are a few of the highlights and key points:

Measurements for Success

Director Woolard sets out the FCA’s criteria for success by which Project Innovate will be judged. These criteria included:

  • The increase in innovative firms entering the market
  • The level of innovation and competition between larger firms
  • The ultimate benefit had by consumers

With regard to the first two criteria, he stated that there had been significant increases in those firms seeking advice in relation to the project as well as the number of applications and successful applications for the regulatory sandbox which will now progress to testing.

He stressed that the key purpose of the entire project was to achieve positive outcomes for consumers. However, he did not offer any specific examples of success in this regard, but he did state:

“The potential numbers of consumers who could benefit from the services offered by those firms has moved in the space of one year from being counted in the tens of thousands to being counted in the millions.”

International

The speech also covered the project’s international outreach and outcomes. Director Woolard told the audience that the concept behind the project had caught the attention of regulators globally and had led to cooperation agreements being signed with counterparts in China, Japan, Canada, and Hong Kong. In contrast to the positive discussion, he did voice concern surrounding the possibility of a ‘Wild West’ regulatory sandbox emerging. Such an initiative, he believes, would run counter to the spirit of the original project as it would act in favour of firms rather than the consumers, the true beneficiaries.

To ensure continued, shared, and beneficial results he stressed the importance of developing consensus through supra-national bodies such as the G20 and the International Organisation of Securities Commissions.

Regional

For the last part of his speech Director Woolard looked closer to home. He welcomed the emerging and sincere interest in FinTech hubs outside of London and noted how the FCA was eager to see them grow into an entire new wave of innovation.

In the past, the FCA developed experience nurturing such hubs in locations like Cambridge, Liverpool, and Bristol. Now, he is hoping to see the same in the Edinburgh-Glasgow corridor and the Manchester-Liverpool area. He believes can be achieved through cooperation with both regional governments and the Treasury’s digital envoys.

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