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Back in 2014, the UK's financial watchdog, the Financial Conduct Authority, launched Project Innovate. It advises companies, whether fintech start-ups or high street banks, which existing regulations might apply to cutting-edge products. Now it's teaching the rest of the world how to handle their fintech innovators, too.
Project Innovate helped burnish the FCA's credentials for promoting competition, part of the post-crisis agenda of trying to break up banking monopolies. Meanwhile, the UK government has been pushing London's fintech scene for some time, which includes companies such as TransferWise, Funding Circle, and ZOPA. Project Innovate includes a so-called sandbox where companies can test products with temporary authoriation. So far, the innovation hub has helped more than 500 companies, with over 40 getting regulatory authorisation.
The initiatives have been copied across the world, and in August, the FCA announced a new alliance with 11 foreign watchdogs to start a global sandbox with a view to products launching in two or more jurisdictions. The FCA has, in any case, signed co-operation agreements with about 10 foreign regulators, including ones in Australia, Singapore, and, most notably, the United States Commodity Futures Trading Commission. Chris Giancarlo, the CFTC chairman, dubbed Project Innovate the gold standard. More strikingly, the FCA's approach caught the eye of global giants, with Microsoft urging US regulators to be more FCA-like.
An EY worldwide survey in 2016 found that the UK was the most friendly jurisdiction for fintech. And that prompts a question. If an industry, particularly one like fintech where the twin forces of big tech and banking converge, praises its watchdog -
Good dog.
- shouldn't that be a worry for the rest of us?