FCA announces creation of a Global Financial Innovation Network

Highlights

On 07 August 2018, in collaboration with other financial regulators the Financial Conduct Authority (FCA) announced the creation of a Global Financial Innovation Network (GFIN) and launched a consultation on the role the GFIN should play.

The GFIN builds on the FCA’s proposal in February 2018 to create a “global sandbox” by proposing a more efficient way for innovative firms to interact with regulators, helping them navigate between countries as they look to scale new ideas. It will also create a new framework for co-operation between financial services regulators on innovation related topics, sharing different experiences and approaches.

The consultation period closes on 14 October 2018.

Membership

Membership of the group currently includes financial regulators from Abu Dhabi, Australia, Bahrain, Canada, Dubai, Guernsey, Hong Kong, Singapore, the UK and US. While the group remains open to new members, some interested parties may be disappointed there is no involvement at this stage from important financial regulators in the US, China, Japan, EU27 Member States or the EU.

Feedback on the “global sandbox”

The consultation paper follows a proposition document published by the FCA earlier this year on the idea of a “global sandbox”. Key themes to emerge in feedback to that proposal include the need for:

• regulatory co-operation on common challenges
• a space where industry can engage with a broader group of regulatory stakeholders on a single topic or policy question
• greater speed in bringing ideas to international markets
• transparency and fairness in the process for companies wishing to apply for cross-border testing, and
• recognition that a number of technologies and topics apply cross borders (including AI, distributed ledger technology, data protection, regulation of securities and Initial Coin Offerings, know your customer or anti- money laundering, and green finance).

Following this feedback, it has been decided to change of name of the group to GFIN. This reflects the expanded nature and scope of the group, which now considers the concept of a global sandbox to be just one of many tools that may be available.

Mission and objectives

GFIN aims to be “a collaborative policy and knowledge sharing initiative aimed at advancing areas including financial integrity, consumer wellbeing and protection, financial inclusion, competition and financial stability through innovation in financial services, by sharing experiences, working jointly on emerging policy issues and facilitating responsible cross-border experimentation of new ideas.”

GFIN plans to achieve its stated mission by performing three main functions:

• creating a network of regulators and related organisations that promotes information and knowledge sharing on emerging innovation trends, local experimentation, tests and initiatives, and providing accessible contact information
• collaborating on key policy issues to inform the approach taken by regulators, with the view to support the work of standard setting bodies and explore RegTech solutions, and
• supporting companies in conducting trials across multiple jurisdictions to allow them to navigate multi-jurisdictional regulatory issues, both in the B2B and B2C space.

Next steps

The group will engage with interested parties across jurisdictions over the next two months. Following the end of the consultation period, the group will review feedback and agree on next steps, including a timeline to launch the GFIN.