AMI has responded to the FCA consultation on creating a new Global Financial Innovation Network comprising international regulators. The proposals set out the functions of the forum and the introduction of a global sandbox.
It however omits fundamental information, particularly the costs of the GFIN and how they will be apportioned to firms. The FCA is legally required to undertake and publish a cost benefit analysis (CBA) before proposing or amending rules with CBAs having been historically included as part of any consultation, on the basis that the regulator has considered them to be “about transparency” and “an important part of the FCA’s accountability framework”. For such significant proposals to lack any estimate of costs and whether they are proportionate to the potential benefits contradicts its commitment to transparency and the overall requirement to be transparent.
In publishing this paper the FCA referred to these proposals as following an initial consultation in February 2018 to which 50 responses were received. However we have been unable to locate this “initial consultation” on the FCA website nor does it appear to have been made public to fee-paying firms. It is AMI’s view that this has been developed on the basis of limited discussions with ‘innovative’ firms. The FCA’s 2018/19 Business Plan, published in April, stated that “last month we invited stakeholders to share their views on what a global sandbox could look like; there is a lot of interest in the idea of cross-border testing and the benefits this could bring”. This is the only prior public reference to its work on a global sandbox. AMI has asked the regulator to publish its “initial consultation”, a list of the 50 ‘respondents’, and the stakeholders involved in these working groups (including the proportion of authorised and non-authorised firms and the percentage that these firms contribute to the FCA’s fees).
Robert Sinclair, Chief Executive of AMI said:
“We are concerned that the FCA continues to expand its innovation agenda by expanding its remit and objectives, and inappropriately allocating resources with a disregard for the firms that fund it.
The FCA is expected to focus on relevant consumer and market issues, so helping overseas technology firms become authorised in the UK should not be a priority. It is already being anti-competitive with its existing sandbox as it gives dedicated regulatory support for some unauthorised firms (paid for by industry) whereas regulated firms have only the FCA call centre as a point of contact. To extend this cross-subsidisation of costs on an international scale is inappropriate for a domestic-facing regulator. The global sandbox will only benefit the firms that are in it and the FCA’s reputation for facilitating innovation.
We are seeing a regulator that is less transparent and less willing to listen to feedback. This is a consultation in name only and we think that these proposals have been developed with selected stakeholders, with discussions mislabelled as consultations, and will no doubt continue to be implemented without any consideration of costs or industry feedback.”
Our response can be found here.