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Thursday, 21 June 2012

Innovation Meets The Financial Services Bill

Embedded below is a set of amendments to the Financial Services Bill which I've prepared with the help of a colleague, Tony Watts, at the invitation of several Peers to aid in their review of the Bill. The paper builds on a submission to the UK government in January.

The aim is to require the authorities to encourage responsible innovation in retail financial services generally and, as a case in point, to clear the way for the growth of peer-to-peer platforms - transparent, low cost services that are open to all but which don't tie up vast amounts of capital or require a public guarantee.

Specifically, these amendments will:
  1. Generally oblige the financial authorities to look outside the regulated markets when assessing whether there is adequate competition within those markets;  
  2. Remove the uncertainty, cost and delay in launching new peer-to-peer platforms, by creating a clear set of rules by which they must operate, regardless of the type of instruments available (reflecting the carve-out for retail payment services from the historic ‘banking monopoly’); 
  3. Enable the inclusion of peer-to-peer loans and investments within the small range of assets currently available to ordinary people via ISAs.
  4. Enable the same process of evolution towards cost-efficient and transparent financial services that we have already seen in other online retail markets.
The document is still in draft, and comments are welcome.