Brussels, 16 June 2017 – Finance Watch, the public interest advocacy association working to make finance serve society,  yesterday submitted its response to the “European Commission’s public consultation on FinTech: a more competitive and innovative European financial sector”.

Finance Watch chair, Rainer Lenz, said:

“FinTech has great potential to improve the welfare of EU citizens by competing with sluggish financial sector incumbents, slashing costs and removing barriers to credit and transaction services. But it could also create new risks for citizens and the financial system that we do not fully understand, for example through our interactions with big data and artificial intelligence. Whether the sector develops in a mainly positive way in future will depend to a large extent on how policymakers engage now.”

Finance Watch recommends that the EU play an active role by creating a new single regulatory framework for FinTech built around society’s financial needs – focusing for now on transaction service providers, crowdfunding and robo-advising. This framework will need a dedicated supervisory capability to build high standards and trust in the sector from the outset. This should encourage the sector to grow in healthy ways, within and across borders, and reduce the EU’s dependence on inefficient or too-big-to-fail incumbents.

Among other things, a new Fintech regulatory framework should aim to:

  • channel savings to long-term sustainable investment,
  • protect retail customers from manipulation and miss-selling,
  • prevent personal data from being abused to discriminate against people or undermine risk pooling,
  • create common disclosure standards so that platforms can be fairly compared,
  • remove cross-border barriers, and
  • avoid the emergence of new systemic risks.

Finance Watch Secretary General, Benoît Lallemand, said:

FinTech is like a teenager in the family, bringing a healthy, ambitious challenge. As this exciting sector enters an important phase of development, policymakers must act like good parents and ensure it leads to the best possible outcomes from a public interest perspective.

 

NOTES