Conservative MP Adam Afriyie.Chris Jackson – WPA Pool/Getty Images
- Conservative MP Adam Afriyie is head of the All Party Parliamentary Group on Fintech.
- Afriyie told BI that the UK needs to maintain a “light touch, but stable, regulatory environment” to encourage fintech growth.
- Fintech advantage is not a “birthright” and the government should be wary of the UK losing its “headstart,” he warned.
LONDON — The head of the All Party Parliamentary Group on Fintech says the UK must continue its “light touch” approach to regulation to ensure continued growth in the sector.
Conservative MP Adam Afriyie told Business Insider: “We have to continue to maintain that light touch, but stable, regulatory environment to ensure that we stay right at the forefront.”
Fintech has exploded in the UK over the last decade and the Treasury estimates that the sector is now worth £7 billion to the UK economy and employs 60,000 people. The sector covers everything from online lending to back-office banking services and even cryptocurrency.
Afriyie, the MP for Windsor, said that the UK is the global leader for fintech at the moment. But he said this “headstart” was “not our birthright” and governments and regulators should be wary about losing the advantage.
Afriyie, who was an IT entrepreneur before going into politics, said: “When I started in business myself in my mid-20s, the development cycle, even around technology, was around five to seven years, from idea to deployment of something. That cycle is now probably about nine months.
“Therefore, even if we are the perfect environment for fintech today, within 12 months to 18 months we could be the worst environment in the world if we’re not careful about what we do.”
Afriyie pointed to the Financial Conduct Authority (FCA)’s handling of peer-to-peer lending as a good example of how to approach fintech regulation. The FCA left peer-to-peer lending, which took off around 2010, to grow relatively unchecked until last year when it began to take a closer look at the sector.
“By enabling there to be a bit of a wild west when it all started, the FCA, the Treasury, we’re now looking at it and saying: well OK, now we’ve clearly got the foothold, innovation has clearly taken place in business models and deployments of these models, now is the time to say OK, let’s take a look at these operating models and ensure we’re not turning a blind eye to anything that may be untoward in the way that peer-to-peer lending takes place,” Afriyie said. “So far it’s been a pretty good story.”
The FCA has voiced some concerns about “transparency and fairness” in the peer to peer sector and is proposing tougher new rules for the sector.
Afriyie said: “At the same time, the government must absolutely protect people both from monopolistic practices within the fintech sector and secondly to ensure that the information that consumers are getting is sufficient for them to make an informed decision about what they’re investing in.”
But he said: “That relationship with the regulator is actually at the heart of why we’re doing well with peer-to-peer lending.”
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