Kalifa Review of UK Fintech Published

HM Treasury has published the highly-anticipated Independent Strategic Review of U.K. Fintech, led by Ron Kalifa OBE. The aim of the recommendations is to, among others, ensure the U.K.'s competitiveness, attract investments for individual fintechs and raise the U.K.'s status as a global hub. The Kalifa Review makes recommendations in five key areas: (i) policy and regulation; (ii) skills and talent; (iii) investment; (iv) international attractiveness and competitiveness; and (v) national connectivity. The delivery of these recommendations is to be led by the Centre for Finance, Innovation and Technology, which is mandated by the Government but led by the private sector. This post focuses on the policy and regulation discussion.

The key policy and regulation recommendations are:

• A Digital Finance Package to launch a new regulatory framework that prioritizes new areas of growth and cross-industry challenges, as well as adopting specific policy initiatives. The package would comprise:
  • a Fintech strategy, which would focus on cross-sectoral issues and key areas that require specific support, such as regtech, cyber security and public infrastructure;
  • policy initiatives, such as the development of a data strategy, digitizing financial services to improve the environment for fintech, improve services to consumers and drive efficiency in the financial sector. These would include developing a Central Bank Digital Currency, supporting the digitization of financial markets infrastructure by, for example, full implementation of the dematerialization of securities, reviewing key legislation governing securities settlement and insolvency protections and supporting environmental, social and governance objectives;
  • a review of fintech and payments regulation, including assessing the navigability of the regulators' rules;
  • using fintechs to support financial inclusion and capability, including incentivizing fintechs to focus on certain demographics or areas to improve financial inclusion and for incumbents to engage in financial inclusion;
  • establishing a Digital Economy Taskforce mandated to deliver the Government's objectives for fintech, to develop its fintech strategy and to effect an implementation plan;
  • develop fintech expertise: the Government and regulators could improve their technical understanding of fintechs' business models and markets.
• Scalebox: The Financial Conduct Authority's launch of the regulatory sandbox was world-leading in its support of innovation. The Scalebox would aim to continue the FCA's efforts with a focus on supporting fintechs in their growth phase and in relation to Priority Fintech Areas. Recommendations include enhancing regulatory sandbox, creating a digital sandbox to support innovation at proof of concept stage, supporting partnering with fintech and regtech firms, and providing additional regulatory and supervisory support for regulated firms in the growth phase.
• Developing a coherent and consistent global U.K. trade policy in relation to fintech and digital matters, to include existing or better commitments in ongoing and future trade agreements and bilateral mechanisms.

View the Kalifa Review of UK FinTech.

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