Don’t Be Scared to Innovate, U.K. Finance Watchdog SaysBen Moshinsky
Financial firms mustn’t be so scared of their regulators that they fail to develop new investment products, according to the industry’s top U.K. watchdog.
Middle-income groups aren’t being well-served by financial firms because banks and investment advisers have pulled back from providing advice and products in the wake of scandals involving the mis-selling of insurance and manipulation of benchmark interest rates, Martin Wheatley, chief executive officer of the Financial Conduct Authority, said in a speech at Bloomberg LP’s European headquarters in London today.
“We can’t let innovation and development be blighted by the fact we still have some scandals that we’re dealing with,” Wheatley said later in an interview with Bloomberg Television’s Guy Johnson and Olivia Sterns. “We want firms not to be so scared of innovating and making changes in the industry that they won’t bring through the products that people need to save.”
The FCA is softening its tone to firms since Wheatley led a crackdown on executive bonuses and retail-banking sales practices last year. U.K. banks have set aside more than 13 billion pounds ($22 billion) over the past three years to compensate customers who were sold payment protection insurance they didn’t need. Lenders still face probes into allegations that key currency and commodity benchmarks were manipulated.
The FCA has set up a regulatory working group to gather information on how financial firms and consumers use technology such as mobile-phone applications to pay bills and move money, Wheatley said.
“London has the capacity to be the European trend-setter in a booming tech scene,” Wheatley told banking executives at the speech. The FCA will aim to provide an “environment that encourages that innovation,” Wheatley said.
The regulator will start seeking views next week from the industry on its plans to foster and monitor advances in technology, including virtual currencies, he said.