UK – Page 3 – FinTech and Blockchain Law Watch

Open Banking: UK Parliamentary Roundtable

Jan 30 2018

The UK All Party Parliamentary Group (APPG) on FinTech and APPG on Alternative Lending will be hosting an invite-only roundtable on Open Banking, taking place on 31 January from 9:00-10.30am at the Houses of Parliament.

Open Banking went live in the UK on 13 January. From this date, the high street banks were required to make their customers’ bank transaction data available to third party businesses when instructed to do so by the customer. This is the first major milestone in a multi-year programme to open all payment products to the market for financial services. Over time, it is expected to revolutionise the way consumers and small businesses use and access financial services.

Open Banking was the main remedy mandated by the UK Competition and Markets Authority (CMA) following its investigation into the supply of personal current accounts and banking services in 2016. The CMA concluded that UK banks do not compete hard enough for customers’ business; and that technology should be employed to enable customers to compare and access better deals from new providers.

The Roundtable will be an opportunity to hear the latest from the Trustee of Open Banking, Imran Gulamhuseinwala, two weeks after the new services went live; and to raise any concerns about the potential for consumer detriment. You can register your interest here.

UK Islamic FinTech Panel Launched

Jan 25 2018

By Jonathan Lawrence

An independent group of Islamic Finance and FinTech practitioners came together on 24 January for the inaugural meeting of the UK Islamic FinTech Panel. The panel aims to create momentum in the Islamic FinTech sector by building on London’s position as a global FinTech hub and as a recognised centre for Islamic Finance.

The panel will be chaired by Harris Irfan, MD of Cordoba Capital, an Islamic Finance and Islamic FinTech advisory boutique. Irfan was previously CEO of Deutsche Bank’s Islamic Finance subsidiary, Global Head of Islamic Finance at Barclays and Head of Investment Banking at Rasmala Group. A recent white paper on the Islamic Finance sector, published by Cordoba Capital and IslamicBanker, promoted the idea of an Islamic FinTech panel as a means to build a community to work alongside existing public sector infrastructure in order to provide support to sharia-compliant FinTech companies. If you would like a copy of the white paper, please contact Jonathan Lawrence.

New Report on UK Alternative Finance

Jan 10 2018

By Jonathan Lawrence

The Cambridge Centre for Alternative Finance sits within the University of Cambridge Judge Business School and has recently published its 4th UK Alternative Finance Industry Report entitled “Entrenching Innovation”. The Centre defines alternative finance as financial channels and instruments that emerge outside of the traditional financial system (i.e. regulated banks and capital markets).

FinTech in the Fight Against Money Laundering

Dec 22 2017

By Jonathan Lawrence

Rob Gruppetta, Head of the Financial Crime Department at the UK Financial Conduct Authority (FCA), recently gave a speech at the FinTech Innovation in Anti-Money Laundering (AML) and Digital ID regional event, London about “Using artificial intelligence to keep criminal funds out of the financial system”. He considered whether machine learning and artificial intelligence (AI) techniques could help. Better transaction monitoring is not the only way AI can aid the fight against money laundering. The Financial Stability Board (FSB) published a report on 1 November about the impact of AI that identified other ways it can help. Examples include AI-driven anti-impersonation checks that evaluate whether photos in different identity documents match, and using machine learning to identify customers that may pose a higher risk and so warrant, say, a deeper probe into the sources of their wealth.

Bitcoin Remarks by UK FCA Head

Dec 20 2017

By Jonathan Lawrence

Andrew Bailey, the Chief Executive of the UK Financial Conduct Authority (FCA), recently gave an interview to the BBC in connection with bitcoin. In remarks on 14 December, Mr Bailey said that he currently sees no systemic risk in bitcoin and is not pushing the UK government to make the cryptocurrency part of the FCA’s regulatory remit. He emphasised that investors should be prepared to lose everything if they buy bitcoin, however as long as people understood the risks of what he termed “a very volatile commodity”, he would not press the UK government to legislate that the FCA regulate it. He said “I don’t think bitcoin is prevalent enough at the moment to be a systemic threat in the way we experienced during the financial crisis other threats; it needs watching carefully but I don’t think we’re there yet… If I thought there was evidence of people saying: ‘You know what I’m going to put my pension into? bitcoin!’ I’d be very concerned, but we don’t see that at the moment.”.

FCA comment on ICOs

Dec 20 2017

By Rizwan Qayyum

The UK Financial Conduct Authority (FCA) has released a feedback statement on the Distributed Ledger technology discussion paper from April 2017 (DP17/3).

As a part of this, they commented on ICOs, noting:

“On the Initial Coin Offering (ICO) market, the FCA will gather further evidence and conduct a deeper examination of the fast-paced developments. Its findings will help to determine whether or not there is need for further regulatory action in this area beyond the consumer warning issued in September”

The feedback is available here.

UK Investment Management Industry and FinTech

Dec 14 2017

By Jonathan Lawrence

The UK Treasury recently published its Investment Management Strategy II Report. Building on its 2013 strategy report ‒ which mainly focused on how to improve the UK as a fund domicile ‒ this report sets out the UK government’s strategy to build upon the success of the UK’s investment management industry in the long-term.

One chapter is devoted to FinTech. The government is keen to see FinTech and asset management firms utilising the Financial Conduct Authority’s (FCA) Project Innovate, engaging early with the regulator to gain tailored regulatory support and test innovative products in a safe place. It also encourages the sector to take advantage of the FinTech bridges established between the UK to its global partners. Since 2015, the government has established four ‘FinTech Bridges’ – with Singapore, the Republic of Korea, China and Hong Kong. FinTech Bridges provide opportunities for firms to scale up their UK FinTech innovations, internationally. By establishing links between government, regulators and private sectors, FinTech bridges reduce the barriers to entry in a new jurisdiction and link UK FinTech firms to international investment opportunities. The UK’s FinTech Bridges all contain regulatory co-operation agreements negotiated between the FCA and their regulatory counterparts.

UK Treasury looking to regulate cryptocurrencies

Dec 10 2017

By Jonathan Lawrence

The UK Treasury is looking to regulate cryptocurrencies. Stephen Barclay, the economic secretary to the UK Treasury, recently answered a Parliamentary question as to what steps his department was taking to regulate (a) Bitcoin and (b) other cryptocurrencies. Mr Barclay answered that the UK government is currently negotiating amendments to the European Union (EU) Fourth Anti-Money Laundering Directive that will bring virtual currency exchange platforms and custodian wallet providers into Anti-Money Laundering and Counter-Terrorist Financing regulation, which will result in these firms’ activities being overseen by national competent authorities for these areas. He said that the UK government supports the intention behind these amendments. They expect these negotiations to conclude at an EU level in late 2017/early 2018. This development follows a recent UK Financial Conduct Authority warning on cryptocurrencies.

UK FCA Announces Next Sandbox Cohort

Dec 07 2017

By Jonathan Lawrence

On 5 December, the UK Financial Conduct Authority (FCA) announced the firms that were successful in their applications to begin testing in the third cohort of the FCA’s regulatory sandbox. The sandbox allows firms to test innovative products, services or business models in a live market environment. The sandbox was a first for regulators worldwide. Since it opened, the sandbox has supported almost 70 firms in testing innovative products and services. The FCA is seeing more applicants from outside London and a broader range of firms. The FCA has also opened the application window for its fourth sandbox cohort.

Bank of England Stress Tests Reveal FinTech Competition

Dec 04 2017

By Jonathan Lawrence

The Bank of England (BofE) published its 2017 UK bank stress test results on 28 November. The BofE found that incumbent institutions are probably underestimating the impact that increased FinTech competition could have on their profitability:

Diminishing revenue from overdraft products. Currently, unarranged overdraft fees are one of the biggest contributors to UK banks’ annual pre-tax profits. FinTechs, like personal financial management services, should help people better manage their money to avoid becoming overdrawn, and aggregation platforms will increasingly redirect customers to cheaper credit options, diminishing their need for overdraft facilities and reducing banks’ returns on such products. Banks may be doubly hit if the UK Financial Conduct Authority decides to impose a strict price cap on the overdraft fees banks can charge customers.

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