The UK’s Financial Conduct Authority (FCA) is calling 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 comments came from Christopher Woodard, the FCA’s head of strategy and competition, who spoke at the Innovate Finance Global Summit in London earlier this week. The report noted the U.K. 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 by Woodard, who said there is real concerns that a “Wild West version could emerge which runs entirely counter to our ambitions.”
He went on to say that he thinks a sandbox that fails to prepare firms to join the regulated world won’t help the firms succeed over the long run.
“We also see potential risks to the reputation of and trust in financial innovation if there are examples of global failures in the future,” Woodard said, according to the report.
Woodard acknowledged the FCA doesn’t think there will be one standard that fits all but that building a common understanding and more international cooperation will help “secure the long term future of the industry.” He noted that the U.K. will work with the G20 and IOSCO to develop more global consensus around FinTech startups.