Regulators holding back fintech firms

A new report from Innovate Finance, published with EY. says regulatory constraints are preventing fintech firms from boosting financial inclusion and helping consumers through a cost-of-living crunch.

The report urges regulators to swiftly expand the UK’s open banking regime and loosen rules on robo-advice so consumers can access free financial guidance on managing their debts.

The fintech industry body said that regulators need to extend open banking rules to a wider range of services, prioritising savings accounts and credit and mortgages to support people in the current economic climate.

The report, which looked at how fintech tools can help with the cost-of-living crisis, also suggested introducing a cap on fees charged to access consumer financial data to broaden the adoption of lower-cost payment methods.

The industry body also called for new regulatory rules to allow for more robo-advice – financial advice provided to consumers through computer algorithms – given to people in need .

Innovate Finance said regulators, particularly the Financial Conduct Authority (FCA), need to agree on clearer guidelines to allow rapid deployment of digital advice from fintechs.

Innovate Finance Chief Executive Officer Janine Hirt said “There is more fintech companies can be doing to help people – especially with open banking, but this can only be made possible by regulatory change.”

“We are at a critical juncture, with consumers facing increasing pressures on their personal finances, and it’s essential there is a swift change in regulatory policy.”

“At a time when consumers everywhere are struggling with the increasing cost of living, fintechs are playing a critical role in helping all of us navigate through this challenging economic period.”

“Currently, eight out of every ten adults in the UK regularly use a FinTech tool, and we can increase fintechs usage, and value to the consumer, by bringing corporates on board as well.”