Watchdog fears it is scaring off City innovators
by Tim Wallace
May 30, 2014, 2:02am
INVENTORS creating new finance technology will be welcomed into the City watchdog to find out how regulations can be made to work for them, Financial Conduct Authority (FCA) chief executive Martin Wheatley said yesterday.
He has spent the last year setting up a new era in regulation which aims at protecting consumers from possible misleading or improper treatment.
As a result he is worried innovators will be too scared to create new products or new technologies for fear of falling foul of rules designed for existing offerings.
“We want an FCA that creates room for the brightest and most innovative companies to enter the sector,” Wheatley said.
“To help this happen, the FCA is opening its doors to financial service firms (large and small) who are developing innovative approaches that aren’t explicitly addressed by current regulation – or where the guidance may be ambivalent.”
The top regulator also plans to lay out clearer guidance on how financial advice is treated online.
Currently firms have clear guidelines if they either offer a full financial advice service, or sell products with no advice at all.
The difficulty comes in the middle of the market, where firms are unsure about the limited levels of advice they give.
The problem can be particularly stark where automated advice is given – where an algorithm finds the most suitable products based on data entered by the customer or investor.
Price comparison websites could fall into this category, as could more complex systems.
As a result the FCA is launching a consultation next month in a bid to discover industry concerns and make it clearer where the line is drawn between different levels of advice, and how the providers must act to stay in the rules.