It was interesting to see the release of a discussion paper by the EBA (European Banking Authority) last Friday. As a regulatory body, they have decided that they need to take action on FinTech, and are asking for input on what action to take.
The EBA is taking forward work in relation to FinTech and is keen to articulate its views and contribute to the policy debates at EU and international levels because of the impact that FinTech may have on the fulfilment of the EBA’s statutory objective of protecting the public interest by contributing to the short, medium and long-term stability and effectiveness of the financial system, for the EU economy, its citizens and business, including by enhancing consumer protection and promoting a sound, effective and consistent level of regulation and supervision across the EU.
As with most regulatory things, it’s a fairly wordy and detailed document that takes you through the main EU developments in FinTech to date:
In December 2016 the Joint Committee of the ESAs (European Supervisory Authorities) published a report presenting the conclusions of its assessment of automation in financial advice, with a particular focus on the risks and benefits to consumers and financial firms, and in February 2017 ESMA released a report analysing the key benefits and risks of DLT applied to securities markets and its interaction with the existing EU regulatory framework . Since 2014 the European Commission has been reviewing developments in the area of crowdfunding across the EU for the purposes of exploring the opportunities and risks to identify if EU-level policy action is needed …
The European Commission launched in March 2017 a Public Consultation on the role of FinTech in building a more competitive and innovative financial sector, which focuses on the following aspects:
(1) accessibility of financial services to customers,
(2) bringing down operational costs and increasing the efficiency of the financial services sector,
(3) enhancing competition in the Single Market by lowering barriers to entry, and
(4) balancing greater data sharing and transparency with data security and protection needs.
The consultation ended in June 2017; 226 responses were received, which are currently being assessed.
Section 4 of the document is of particular interest in that it talks about where they intend to draw up new regulations and directives, and asks for input. The areas affected include:
- authorisation and registration regimes and sandboxing/innovation hub approaches;
- prudential risks and opportunities for credit institutions, payment institutions, and electronic money institutions;
- the impact of FinTech on the business models of credit institutions, payment institutions and electronic money institutions;
- consumer protection and retail conduct of business issues;
- the impact of FinTech on the resolution of financial firms;
- the impact of FinTech on AML/CFT.
In each area, the EBA announces their views and plans, and asks the reader whether the issues identified by the EBA and the way forward proposed are relevant and complete. If you’re in this industry, you may want to respond.