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A fintech agenda for the new UK Government
How the election result might affect the UK fintech industry
With no overall majority in the Commons and Theresa May's leadership being questioned by many commentators, it may take some time before we know how the Conservatives, still the largest party, intend to govern. There will have to be changes to the Ministerial team looking after financial services.
However, as soon as there is clarity, Paysafe aims to hit the ground running with the new UK Government, having already written to the financial services policy leads in each of the main parties. Our objective is simple: to be the go-to, non-bank payments business for policy makers in the geographies in which we have scale. The UK is a very important market for Paysafe, particularly as we are listed on the LSE and our European business is regulated by the UK’s financial services regulator, the Financial Conduct Authority (FCA).
5 Key Policy Areas
There are five key policy areas in which Paysafe has both expertise and a clear point of view: Financial Innovation (fintech), Post-Brexit payments regulation, Cybersecurity, Technology Skills and Digital Financial Capability.
1. Financial innovation and fintech
The UK is recognised by many as the capital of fintech. Paysafe is a strong example of a fintech business which has a significant presence in the UK, where there is strong political encouragement of fintech and a regulator, Financial Conduct Authority, which has a pro-innovation reputation. The fintech ecosystem provides employment and export opportunities throughout the UK.
In order to maintain this momentum, we are asking the new Government for a commitment to working with fintech businesses to develop a pro-innovation regulatory culture in the UK, and have proposed the setting up of a Financial Innovation Task Force with ministerial sponsorship.
2. Post-Brexit payments regulation
There has been a lot of commentary from banks about their preferred regulatory approach post-Brexit. The payments industry is similarly affected as most payments regulation is derived from the EU. Alongside this, a significant proportion of European payments institutions use passporting, often from the UK to other EU countries and are having to develop contingency plans in the event that the UK leaves the EU without a continuation of passporting.
Paysafe’s preference would be for a Brexit resolution that maintained a common regulatory framework for financial services in the EU27 + UK. This would enable EU27 regulatory authorities to rely on the FCA to regulate a UK-based firm as if it were based in the EU27 (and vice-versa). It would require a commitment from the UK to include, within the legislation which would turn current EU law into new UK law (known as the “Great Repeal Bill”), provisions ensuring continued legislative equivalence with EU27 financial services legislation. In addition, the FCA would also need to continue to adhere to Guidelines coming from the European Supervisory Authorities such as the European Banking Authority.
Cyber-criminals respect no borders. As business and Government become ever more e-enabled, it is even more important that they work together to protect the world’s online infrastructure from cybersecurity threats.
Paysafe is asking the Government to re-affirm its commitment both to implementing the EU’s Network and Information Security Directive (NIS Directive), and also to greater information sharing among cyber-security agencies across the world to combat these threats.
4. Technology skills
Paysafe is an international business with customers around the world. In a dynamic global payments industry, having access to the very best talent is vitally important, and one of the reasons why the UK is such an attractive location for fintech.
Talent arrives in two ways: from within the UK (both in-business and in school/university education) and from outside the UK. We need access to both. For the UK to continue to develop as a strong, technology-based economy it is vital that there is an even greater focus on Science, Technology, Engineering & Mathematics (STEM) subjects so that UK universities produce the very best engineers, scientists and mechanics.
We are asking for the Government to draw up a Technology Skills Action Plan to investigate this in more depth and ensure that all businesses in the science and technology sphere have access to top quality talent now and in the future.
5. Digital financial capability
Whilst digital technology will empower many by simplifying finance, it may also confuse and further complicate an already complex marketplace. There is a risk that the less digitally-savvy will be left behind, while yet others may find the new marketplace even more difficult to navigate than before.
Paysafe is asking for the Government to create a Digital Financial Capability Strategy with the objective of building up everyone’s basic digital skills and empowering more people to take advantage of the opportunities of a digital world.
Delivering on this agenda will be important not just for Paysafe, payments and financial services, but for the UK’s economic future, too. It’s going to be an interesting five years.