An All Party Parliamentary Group (APPG) has said the UK should widen its open banking model to speed up growth of FinTech as the part of a wider ‘big bang in financial services.
A report by the Challenger Banking APPG has detailed that while the UK has seen a wide range of new digital challengers enter the market to take on traditional high street giants recently, competition is still being stifled by ‘regulatory intransigence’.
The APPG has called on the UK government to start a new ‘big bang’, imitating the deregulation of the financial markets in the 1980s.
The group has said that by eliminating the shackles from FinTechs, the government will be able to make strides in levelling-up the country by reducing economic imbalances between different parts of the country.
The APPG said, “It is time for a new Big Bang to break the restrictive regulatory practices which enshrine the dominance and market share of the big five banks.”
Such recommendations produced by the report including calling for more to be done to allow open banking to offer a view of each person’s financial situation.
Furthermore, the report called on regulator’s to establish a Financial Services Compensation Scheme-style system for FinTechs, offering consumers access where their money is not currently protecting by the existing FSCS model.
Banks should also be mandated to offer their branches to challengers before closing them, with the government providing incentives to these challengers to open branches. In addition, financial education was recommended to be a stand-alone curriculum item at both primary and secondary school level.
Chair of the Challenger Banks and Building Societes APPG Karen Bradley MP said, “Levelling-up is a key Government priority and the current cost of living crisis only serves to reemphasise how important it is. Financial Services providers can play a big role, but overly cautious regulation is holding them back.
“Regulators fear of failure means many are forced to operate with one hand tied behind their back and this doesn’t have to be the case.”
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