UK fintechs call for regulation overhaul

In an open letter signed by more than 70 fintechs including Klarna, Atom Bank and Monzo, it comes nearly one year on from the Kalifa Review. Published on 26 February 2021, the review identified the opportunity for Britain to build on its success as a leading global centre for fintech. 

Commissioned by chancellor Rishi Sunak, the review - according to Innovate Finance - provided a “clear strategy” and a “helpful roadmap” set out across five chapters. These focused on areas such as policy and regulation, skills, investment, international and national connectivity. 

Off the back of this, government regulators and industry have taken actions to implement a lot of the recommendations outlined. This includes a government commitment to support a new industry-led Centre for Finance, Innovation and Technology, which will help catalyse development of much-needed solutions to critical challenges facing the sector. 

In addition to this the Bank of England has commenced work on a Central Bank Digital Currency, the Financial Conduct Authority has set up a scalebox to support fintechs and, with the support of the City of London, has supported the development of net zero fintech solutions through its digital sandbox. 

In its open letter, Innovate Finance says that, while good progress has been made, the industry mustn’t rest on its laurels. It added that it’s imperative it continues to build on this momentum and work together to establish an environment in the UK that’s even more supportive of and conducive to innovative financial services. 

The Kalifa Review also recommended the introduction of a full UK crypto regulatory regime. Innovate Finance says the industry needs to work together to create a clear UK strategy for growing global opportunities in this area as well as managing risk. 

Additionally, it believes fintechs must continue to better address the growth capital gap in the UK. As part of this, there must be a shift in the mindset of institutional investors in the UK to take a longer-term view and focus on growth opportunities in Britain. 

Alongside this, there’s an opportunity for regulators and industry to further encourage larger UK institutions to invest more in advanced technology.