Project Innovate: an incubator for growth?
The FCA launched its new Innovation Hub yesterday, with the aim of fostering support to businesses looking to benefit consumers in the financial services sector.
The Innovation Hub builds on the published feedback from the FCA's Project Innovate. The response to the Project Innovate consultation process was a backlash of criticism from respondents regarding the current regulatory regime.
For those not in the know, Project Innovate is a new FCA initiative with "the aim of helping both start-ups and established businesses bring innovative ideas to the financial services markets".
The main theme of the feedback was a criticism of the FCA Rules, which regulated firms claim are outdated and overly complex, with innovation stifled by a lack of engagement from the regulator.
Firms continue to express concerns about the inconsistent approach of the regulator's staff and different divisions. Small businesses were also critical of a perceived preference shown to established firms.
Perhaps the only reprieve for the FCA within the feedback was the concession that it was doing a better job than its predecessor, the FSA.
Participants in the consultation process were also eager to put forward their suggestions for improvement, such as a "sliding scale" approval system, where firms could have compliance badges such as "FCA Approved", "FCA Aware" and "FCA Engaged" to indicate where they are on the route to authorisation.
Other ideas advanced included using a wider selection of communication tools such as Skype, and coaching sessions from the FCA for firms in the sector.
The regulator's eagerness to engage with young businesses comes on the back of a move by the UK government to expand financial technology innovation.
The Innovation Hub will be a tool in further advancing engagement with the regulator. It will provide businesses who qualify with access to, amongst other things: a dedicated contact for queries relating to innovation, assistance with understanding the regulatory framework and how it applies to their business; and a mechanism for identifying areas where the regulatory regime needs to adapt to facilitate innovation.
Whether this will help to reduce red tape and foster growth (long stated aims of this government) is yet to be seen.