U.K. Will Allow Limited Roll Out of FinTech Products With Reduced Regulations

Max Colchester and Rachel Witkowski reported this week at The Wall Street Journal Online that, “A U.K. regulator is breaking new ground in its quest to help nurture financial-technology projects.

“The Financial Conduct Authority on Monday outlined the structure and other details of its regulatory ‘sandbox,’ scheduled to launch May 9. The project, which regulators around the world will be watching closely, will allow both fintech startups and established companies to roll out a new product or business model on a limited basis without having to wade through the process of getting full authorization. The FCA hopes this will reduce the time and cost of getting new ideas to market.

“The move comes as the fintech sector, ranging from online lending to digital currencies, continues to grow quickly, with regulators trying to keep pace.”

The Journal writers explained that, “The British regulator is in a good position to undertake this type of experiment because one of its mandates is to promote competition in the U.K. financial sector. It has been exploring ways to promote innovation and foster the U.K.’s fintech scene since 2014, having worked with more than 200 companies.

“Another reason the FCA is well suited to the sandbox approach: It has a ‘principles-based’ approach to regulation, meaning that it enforces ideas rather than just holding companies accountable to a set of rules.

In the U.S., for instance, fintech startups have to contend with a multitude of state and federal regulators. ‘Often, if we see something that is new and we don’t necessarily have a framework for analyzing it, the reaction might be either to say ‘no’ or to let it languish,’ said Amy Friend, chief counsel at the U.S. Office of the Comptroller of the Currency, in a recent interview.”

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