What will Liz Truss’ election mean for UK FinTech?

After a grueling two-month long election period, the Conservative and Unionist Party elected Liz Truss to be its new leader and prime minister.

Alongside a litany of other policy promises, Truss has headed into the financial services sector – recently promising to help the City of London maintain its competitive edge and “drive growth and investment”, while calling for the merger of the Financial Conduct Authority, the Prudential Regulatory Authority and the Payment Systems Regulatory Authority.

What could Truss’ election mean for the UK’s booming FinTech sector? In the opinion of Janine Hirt – CEO of Innovate Financing – the coronation gives the new Prime Minister the opportunity to launch at top speed.

Hirt said: “The new Prime Minister and his Chancellor have the opportunity to build on our FinTech success story over the past decade to establish the UK as the world’s leading financial centre, led by innovation in digital assets and digital finance.

“Previous government plans to make the UK the best place to start and grow a crypto business should be expanded to form a more comprehensive and cohesive strategy, and accelerated to move faster, with an achievable plan and timeline. . This requires urgent action on the immediate market test from workable financial promotion rules for crypto assets to a roadmap for the digitalization of capital markets and payments. This should also include an additional commitment to open finance, building on the work on smart data that Kwasi Kwarteng led as trade secretary and on digital ID.

On the regulatory side, the CEO of Innovate Finance also sees a clear opportunity for the current Financial Services and Markets Bill to advance the competitiveness of FinTech and UK financial services.

Hirt also said unlocking additional open banking applications is a key way government and FinTechs can work together to mitigate rising costs for SMEs and businesses.

Open banking itself is an area with huge growth prospects – with a report from the Challenger Banking All Party Parliamentary Group calling for more to be done to enable open banking to provide a view of everyone’s financial situation. nobody.

IBOS Association Chief Executive, Manoj Mistry, echoed this momentum, saying: “The continued roll-out of open banking technology is imperative for the future of UK FinTech and the wider development of data. smart in financial services.

“The election of Liz Truss as the new PM will hopefully see the acceleration of smart data sharing, led by the government’s Smart Data Council, which aims to develop an ecosystem that strengthens collaboration with industry across all sectors. New regulation is also urgently needed. A new regulatory framework for open banking and smart data would provide certainty for industry players and protection for end users.

Market support

Although the UK is one of the largest FinTech markets in the world, market participants are still convinced that more can be done.

Adnan Choudary – head of policy at Wise – believes three key areas can be addressed. First, internal communications in Whitehall need to be improved, “There are currently FinTech teams spread across the Treasury, Department for Culture, Media and Sport, Department for Business, Energy and industrial strategy and the Department of International Trade to advance policy developments in the sector.

“The Government should ensure there is a strategic, across Whitehall approach to supporting the sector and proactively engaging with industry, using our expertise to guide forward-thinking policy. This will ensure that the new rules will continue to promote innovation, growth and attract investment for the industry.

Global support for UK FinTechs also needs to be boosted. He remarked: “The UK’s financial services system is unparalleled – there are many things it does incredibly well, and it should seek to share these best practices in order to support the international export of its FinTechs. The UK’s pioneering approach to modernizing and democratizing its payments infrastructure is testimony to this.

According to Choudary, the last step the government needs to take is to boost talent across the sector: “The industry needs more engineers, analysts and technical managers to drive design and development forward. of products. Whether through fast-track visas or extra funding for science education across all age groups here in the UK, this pool of talent needs to thrive.

Corporate Finance Network founder Kirsty McGregor believes Truss’s election could be key to supporting investment and small businesses. She said: “The new Prime Minister must focus on expanding investment opportunities, which will be key to economic recovery as well as the sustained growth of the SME sector.

“Furthermore, while a number of policy measures were previously introduced to boost investment, including consideration of depreciation reforms, the government now needs to build coherence to support small businesses.”

The war on technocrats

Truss’s recent call for the merger of the FCA, PSR and PRA was seen by some in his party as part of his “war on technocrats”. The merger call has divided opinion in the financial services industry, with many seeing the pros and cons.

Martin Hartley – chief executive of emagine – offered a warm response to Truss’s plans. “An announced merger of FCA, PRA and PSR is certainly big news. Does this Truss “govern like a conservative” by easing regulatory bodies and their costs? Anyone who has dealt with these organizations will welcome any opportunity to make them more efficient.

The FCA, in particular, does not appear to have done a good job due to its perceived lack of oversight over the London Capital Finance scandal and the Blackmore Bond collapse, which left UK savers with huge losses. It could be argued that the merged organizations can share information more easily and potentially help fintech companies compete directly with banks on payments and retail accounts.

Hartley added that Truss will have to see the city ramp up in order to stimulate economic activity if his promise to cut taxes can be fulfilled. He concluded: “In other words, streamlining regulators to make London a more attractive place to do business may well support its aims.”

On the other side, Seb Wallace, chief investment officer at Triple Point Ventures, gave the merger a much colder reaction, saying: “The proposed merger of FCA, PSR and PRA is a distraction and should not be pursued. . Instead, the government should ensure that regulators approach competition and the ease of doing new business with the same fervor as they approach consumer protection.

“Simply put, the FCA’s current approach makes it a significant barrier to financial innovation in the UK, and only the government can course-correct regulators in this regard.”

Copyright © 2022 FinTech Global