The Expert Group on Regulatory Obstacles to Financial Innovation (ROFIEG), set up by EC in June 2018, published a report on the recommendations for creating an accommodative framework for technology-enabled provision of financial services (fintech). The report presents thirty recommendations that cover all segments of the financial sector, all types of novel technologies, a wide range of business cases currently observed, and all types of market players. The recommendations also span important policy areas, including the prevention of money laundering and terrorist financing (AML/CFT), consumer protection, data sharing and use, and governance and operational resilience in the financial sector. EC also published frequently asked questions (FAQ) on the recommendations.
The Expert Group sets out a considerable number of recommended actions, ranging from the monitoring of market developments and emerging opportunities and risks to the clarification of the applicability of (or where appropriate adaptation of) the existing EU regulation and the introduction of new EU law. The recommendations are grouped into four categories:
- The need to adapt regulation to respond to new and changed risks caused by the use of innovative technologies, such as artificial intelligence and distributed ledger technologies (DLT), and to take up any emerging opportunities with respect to regtech or suptech (Recommendations 1-12)
- The need to remove regulatory fragmentation and ensure a level playing field between incumbents and new market entrants, both fintech startups and bigtech firms, across EU (Recommendations 13-24)
- The necessity to reconcile the regulation of personal and non-personal data with the opportunities and risks offered by fintech (Recommendation 25-28)
- The need to consider the potential impact of fintech from the perspective of financial inclusion and the ethical use of data (Recommendations 1 and 29-30)
In some cases, the Expert Group identifies the need for immediate and bold policy action. In particular, the Group identifies several areas where industry is being held back in its capacity to leverage available technology by the absence of clear regulation (in particular, in the area of crypto-assets) and notes that markets may establish practices that are difficult to change subsequently, pointing to the need for ex-ante bold thought leadership and policy action.
Keywords: Europe, EU, Banking, Insurance, Securities, Fintech, Regtech, Recommendations, Financial Innovation, Artificial Intelligence, Bigtech, Financial Inclusion, ROFIEG, EC
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