Andrew Bailey, chief executive of the Financial Conduct Authority (FCA), the UK’s financial regulatory watchdog, warned UK banks on Wednesday (Feb. 7) that they shouldn’t use excuses of security concerns to stop FinTechs from accessing customer data.
According to a report in Reuters, in January the European Union activated rules that let licensed FinTechs and retailers take payments from a bank account, or to access transaction history from an account to provide consumers with recommendations for lower overdraft and loan rates at other rivals. The idea is to enable smartphone apps to compete with banks in the UK.
Several lenders have requested more time to ensure that the technology for sharing data is secure. Still, Bailey told UK lawmakers that shouldn’t be an excuse to keep new competitors at bay.
“One thing that we and the CMA will be very alert to (is) that if the banks seek to use the security argument to suppress competition as opposed to raising standards of security, then clearly that would require intervention by one or both of us,” Bailey said.
The FCA has signed off on 40 firms under the rules put in place in January, and has more applications for licenses in the pipeline. “It will frankly take a while to take off,” Bailey said.
In April, the FCA called for the creation of an international regulatory framework for FinTech startups to prevent a so-called “Wild West” approach to governance of the FinTech market. In a report, the FCA said it was particularly concerned that regulatory standards could suffer as different jurisdictions continue to compete against each other for FinTech business.
The UK was the first country to create a sandbox for FinTech startups in 2015, giving banks and startups a space to test products and services that was free from regulatory standards and guidelines. Since then, the idea has been copied by other jurisdictions, prompting concerns that a “Wild West” version could emerge.