On the subject of innovation and the use of innovative technology for transforming the financial services sector, we highlight the on-going work of the FCA’s Project Innovate. In June 2014 we published an article revealing the FCA’s plans for Project Innovate, an initiative aimed at helping new and established businesses understand how the FCA approaches authorisation of innovative product ideas in the financial sector. The main focus of the Project, and the means by which the support is offered to businesses, is the Innovation Hub. Through the Hub eligible businesses will have access to support and advisory services as well as opening up a channel to advocate for regulatory change they believe necessary to enable innovative financial products to develop in the UK.
In deciding whether a business is eligible for their support through the Hub, the FCA has regard to four broad criteria:
- Is the innovation ground breaking or significantly different?
- Does the innovation offer a good prospect of identifiable benefit to consumers (either directly or through greater competition)?
- Has the business invested appropriate resources in understanding the regulations in relation to its own position?
- Does the business have a genuine need for support through the Innovation Hub?
We are aware of the Hub having been approached by players involved in developing bitcoin, smart contracts and crowdfunding, all of whom have said that they found interaction with the Hub useful.
Additionally, in April 2015 the FCA announced a new feature available through the Hub, allowing businesses to test ideas for communicating with consumers. If businesses have innovative ideas for disclosing product information, for the process for delivering information or for routine correspondence, the FCA may be able to remove barriers so businesses can test what works for their customers. This could mean waiving or modifying how they apply any rules that may otherwise prevent testing an idea or even help in designing the tests.