A red tape bonfire won’t help the fast moving FinTech sector, according to Christopher Woolard, FCA Executive Director of Strategy & Competition. In an interview with City A.M about the FCA’s Regulatory Sandbox, he observes that the regulator’s Project Innovate initiative, launched in October 2014, gave it the chance to have a closer look at the FinTech scene and to help guide it through the red tape landscape.
It discovered some startups were going to great lengths to get their business outside regulatory reach. “The worst one I saw was a small startup, so five guys, and they’d spent £750,000 in six months trying to design something with their lawyers which avoided regulation,” Woolard recalls. “Actually, the position they really needed to fit in within the regulation was very simple. We established that with them in the course of an afternoon.”
For the sandbox’s first cohort last autumn, the FCA received 69 applications, of which it selected 18. 77 firms, meanwhile, including some from outside the UK, are looking to join the second cohort. This leads Woolard to conclude a red tape bonfire is not the key to a competitive market post-Brexit.
He warns: “When we think about what really makes London a global financial centre, one of the key things is its reputation and the efficiency, the effectiveness, the well-run nature of the markets that operate here and that we regulate. I think we would have to think very, very carefully about diluting that.”