FinTech: public consultation by the French Competition Authority

On 20 May 2020, the French Competition Authority (the FCA) launched a public consultation on the FinTech sector. This consultation takes place in the context of the sector inquiry initiated by the FCA in January 2020 to assess competitiveness of new technologies applied to financial services in France and especially regarding payment services.

In order to shed light on the functioning of this sector, the FCA has first sent questionnaires to targeted stakeholders. The FCA now broadens the scope of its investigation and asks third party players to participate. Indeed, the consultation is open to all stakeholders who have not had the opportunity to respond to the preliminary questionnaires and to those wishing to complete their responses. FinTech foreign businesses not yet established in France can thus express their view on the several topics tackled by the FCA.

In its consultation document, the FCA first highlights the major changes that the FinTech sector has undergone in the past few years, in particular:

• the development of new technologies that have enabled the emergence of new payment services in this sector;
• the market entry of new non-bank players (such as Apple Pay and Google Pay, already settled in France); and
• the adjustment of banking groups to the new developments in the sector, which have, for example, become more willing to acquire FinTech companies or to cooperate with them.

The FCA then submit 12 questions, with regard to three different topics:

• developments in the payments sector over recent years;
• definition of the relevant markets and the analysis of the position and competitive advantages of the different stakeholders; and
• commercial practices that may be implemented by these players.

Stakeholders are invited to answer the FCA’s questions by 19 June 2020.

It is important that any operator intending to enter the French market contributes because the answers collected by the FCA will help it to complete its analysis and opinion on the functioning of the sector in which it may identify some issues to investigate further or some legislative proposals appropriate to render the sector more competitive.

This consultation is another example that the FinTech sector is currently closely scrutinized by European competition authorities. Indeed, the FCA’s consultation follows two other consultations launched by the European Commission on 3 April 2020 regarding (i) a new digital finance strategy for Europe and a FinTech action plan and (ii) a retail payment strategy in the EU. Players can submit their views until 26 June 2020 by using the Commission’s online questionnaires.

In addition, in the UK, the Financial Conduct Authority has launched a public consultation on Open Finance (an extension of the Open Banking principle, seeking to give customers more control over their financial data including savings, mortgages and investments, pensions and consumer credit) and another one on access and use of wholesale data, which aims at collecting comments on the access to and changing use of data and analytical techniques across all wholesale financial markets.

On the side of merger control, the UK Competition and Markets Authority is also closely monitoring deals in the FinTech sector, as such operations are likely to affect a large number of consumers.

In Germany, the Federal Supreme Court recently confirmed the Federal Cartel Office’s (FCO) decision regarding the anti competitive practices of the German Banking Industry Committee regarding rules applied in its "special conditions for online banking", which prevented online banking customers to use their personal security features PIN (personal identification number) and TAN (transaction authentication number) in non-bank payment systems to allow access to third party systems. The FCO had held in 2016 that such rules were hindering the use of non-bank and innovative payment solutions for the online purchase of goods or services.

Additionally, the FCO conducted a sector inquiry into online price comparison tools and banking services were required to provide information on the structure of their service. This inquiry was based on a consumer protection objective and the results were published in April 2019.