Some Fintechs Can Roam Free, Bank of England Chief Says

By Gregory Roberts

Payment providers and some other financial technology operations won’t require regulation by the Bank of England because they are not providing traditional banking services, the Bank of England’s top official said April 12.

Governor Mark Carney’s London speech suggests that the British will continue their flexible policy toward regulation of fintech — an approach that has helped position London as a leader among global financial hubs in responding to the challenges of emerging technologies. That position is threatened by the U.K.’s 2016 decision to leave the EU, a transition, called Brexit, now under way.

Carney took an optimistic approach to capturing benefits such as greater consumer choice and more price competition, improved efficiency and productivity at banks, a stronger, safer financial network and expanded access to credit for small businesses and broader financial inclusion generally.

He specifically mentioned digital wallets providing retail and international payments and aggregators of consumer data that foster price comparisons as fintech services that don’t need to be brought under regulation by his central bank’s Financial Policy Committee (FPC).

“In their current form, these innovations are simply a new front-end to the banking system where fintech providers take a slice of customer revenue and loyalty but none of the associated risks,” he said in remarks prepared for delivery.

“They have generally avoided undertaking traditional banking activities. So for now, absent a substantive change in business models or scale of activities, the FPC is unlikely to want to bring these firms into the regulatory perimeter.”

Threat to Banks

On the other side of the coin, Carney said these challenges could undermine the stability of traditional banks — and that the Bank of England would need to ensure the banks are strong enough to withstand the threat.

U.S. financial regulators are regarded as more cautious than their British counterparts concerning fintech developments. The Consumer Financial Protection Bureau, for example, has proposed increased regulation of digital wallets that store value, under its prepaid-card rule. That rule, which has yet to take final effect, is undergoing review by the bureau and has been targeted by Republicans in Congress for repeal.

The Office of the Comptroller of the Currency has classified payments as a core banking activity in its proposal to offer optional national bank charters to fintech companies.

A different British regulator, the Financial Conduct Authority, is pioneering the use of regulation-lite “sandboxes” for fintech entrepreneurs. U.S. regulators are more skeptical of sandboxes.

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To contact the editor responsible for this story: Michael Ferullo at

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