The European Commission (the “EC”) has published the responses to its public consultation on FinTech (we originally reported on the consultation on 23 March 2017). A total of 226 responses were received from a number of organisations spanning several sectors including, amongst others, the European Banking Authority (the “EBA”), Barclays, HSBC, Microsoft and Visa. A complete list of the responses received can be found here. As a common theme, responses received recognised the positive impact of Fintech and innovation on business and the consumer. Other common themes included the need for further harmonisation and consumer protection.
The need for harmonisation
Many organisations consider that harmonisation of regulations and rules surrounding FinTech is necessary to promote the full implementation of FinTech solutions. For example, the EBA feels that harmonisation is necessary to combat uncertainty surrounding supervisory expectations. One leading financial services provider also considers harmonisation and standardisation could decrease the differing laws and regulatory bodies across the member states. Similarly, another financial services respondent noted that harmonisation should be a key principle in the development of EU FinTech approaches.
Consumer protection and cyber threats
Consumer protection in the context of cyber threats was often cited as a concern in responses. One respondent said that any ‘new channels for sourcing data could potentially increase cyber risks by effectively broadening the network.’ The European Insurance and Occupational Pensions Authority (EIOPA) also considered that digitalisation presents certain risks that authorities and supervisors should ‘examine very carefully’. Furthermore, the EBA stressed the need to address the cybersecurity risks associated with FinTech solutions. Another respondent has suggested that legal and regulatory regimes should promote and enable sharing information on cyber threats ‘amongst parties and even competitors’, believing that increased cooperation between organisations is necessary to respond to the new threats posed by cybercrime.
Further common threads
The following common opinions were also clear from responses:
- the three principles of technological neutrality, proportionality and integrity are appropriate to guide the regulatory approach to the FinTech activities;
- there would be merits in pooling expertise in the European Supervisory Authorities; and
- the Commission should set up or support an "Innovation Academy" gathering industry experts, competent authorities (including data protection and cybersecurity authorities) and consumer organisations to share practices and discuss regulatory and supervisory concerns.
The EC hopes to use the information it has obtained to assess whether the current EU regulatory and supervisory rules are adequate and what future actions may be needed to respond to the emerging FinTech market.