UK Trends and Developments Contributed by: James Burnie, Kathryn Dodds, Olga Antonova and Holly Joseph, gunnercooke llp
The UK approach The initial concern in the UK was working out its proposed relationship with the EU, given the question of whether this might at a future point facilitate trade with the EU. Overall, the approach the UK is now taking seems to be to dispense with this approach and seek to chart its own course towards regulation. The nature of the course taken has arguably, in some respects, not been that initially expected. Rather than reduce regulation, there has often been more of a move towards greater regula - tion, for example in terms of requiring payment services firms to take further steps to protect consumers against authorised push-payment scams, and in the context of crypto-assets, a faster push towards implementing an onerous registration regime for crypto-asset firms that existed in the EU. As such, in some respects the evolution in the UK has arguably been towards greater regulation post-EU than existed before. On the other hand, there are moves to help deregulate the UK market. A particularly interest - ing example of this has been the push towards lessening the obligations under the prospectus rules, with a view to reduce the cost of issuing a prospectus. In this respect, it is worth noting that a core focus is on ensuring that any deregulation does not lead to undesirable outcomes, and so needs to be handled carefully – meaning that it is arguably unsurprising that deregulation would take longer than regulation, given that usually there is an intent behind the regulation, and so there may be a need to ensure that there are not unintended consequences as a result of deregu - lation. The overall direction of travel Regulation moves slowly compared to com - merce, and it is likely to be some time until the
A Brave New World: Fintech in the UK Historically, the United Kingdom has been part of the EU, meaning that it has generally been required to follow the European playbook in terms of approaching regulation of fintech. Whilst it has been some time since the UK left the EU, the core of the UK system has in some ways been a steady evolution of the historic approach rather than an immediate rewrite. We are beginning to see this change, however, as the UK is increasingly plotting its own course with a distinct approach from that in the EU. This has raised the question of how the UK wishes to deal with the competing forces of fintech, and in particular the desire to balance the promotion of innovation and competition against the desire to ensure that consumers and market integrity are protected. Against this backdrop is a general encouragement for the regulator to reduce the amount of red tape for fintechs, however in some ways a lack of a clear direction as to how this should be achieved. A further complication in this respect is the fact that fintech is generally international in concept. As such, the UK is not acting in a vacuum in determining its approach, rather it is more accu - rate to see UK regulation as in competition with other jurisdictions. In this respect, we can see different jurisdictions as being in somewhat of a beauty parade, with different groupings of juris - dictions having different advantages and disad - vantages. For example, the EU has the attractive “passport” , meaning that firms authorised by one national competent authority may operate across different jurisdictions, however this has come at the cost of lack of flexibility in terms of being able to tailor regulation to allow for inno - vation, particularly where the existing rules are based on certain pre-conceptions that are not appropriate for a new fintech concept.
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