Innovate Finance update from Adam Jackson  

New year, new Minister

Last week we said goodbye to Tulip Siddiq and hello to Emma Reynolds as City Minister. In this bumper FinTech policy newsletter, I review progress made in 2024, where Tulip Siddiq MP made a significant contribution, and set out our 2025 priorities for Emma Reynolds and her colleagues. Our CEO Janine and I both worked with Emma when she was at TheCityUK before returning to Parliament last year and we look forward to working with her as Economic Secretary to the Treasury and creating opportunities for early engagement with our members.

2024: setting the agenda

Last year Innovate Finance was more influential than ever on the policy agenda, with our advocacy ensuring that FinTech priorities were advanced by Government and regulators and securing important changes and U-turns on regulatory proposals. 

Innovate Finance firmly established FinTech as a priority with the new Labour Government, building on our engagement and policy work over recent years. We were influential in shaping the Labour Party’s January 2024 financial services policy review, which had FinTech policies as a golden thread throughout its chapters, and their election manifesto which included headline commitments on open finance, wider responsibility for fraud and support for regulatory innovation. 

Our Fintech Plan for Government, which we produced with our members and the wider UK ecosystem and deployed extensively with politicians and officials,  provided a detailed blueprint which was quickly adopted - we secured adoption by the new Government of 4 of our policy recommendations in the first 21 days after the election and many more since as well as support from new MPs and from the regulators. The election also saw - for the first time - a group of MPs with FinTech backgrounds elected on both sides of the House of Commons, who (together with members of the Lords) have worked with us to make the FinTech All Party Parliamentary Group the place to be seen in Westminster. We also hosted our first FinTech party conference reception since Covid in Liverpool, with lots of ministers and MPs discussing issues with FinTech leaders.

We faced some challenges too and you can read my analysis of five events that shaped FinTech policy in 2024 here.

Policy successes on issues we have campaigned for over the last year include:

2025:  the year the UK needs to go faster and further on FinTech competitiveness and growth

As we start 2025, this provides a baseline for our work programme, with a need for the UK to go further and faster in the face of international competition and technological change. Our latest FinTech Investment report shows that whilst Global FinTech investment was down by 20% year on year to $43.5 billion in 2024, the UK saw a 37% decline. The UK retains its position of second in the global rankings, behind the US but other countries are catching up. 

With a dip in investment in 2024, and with the US seeing resurgent market confidence and a pro-innovator stance by President Trump, the UK now needs greater ambition and greater pace of reform. We must double down on innovation, market reforms and progressive regulation. 

At Innovate Finance we look forward to working with our members and the ecosystem, with regulators and policy makers, to go faster and further across a range of issues and areas: 

1. Ambition:  FS Competitiveness and Growth Strategy:

In November the Government confirmed that FinTech will be a priority sector in a new Financial Services Growth and Competitiveness Strategy, to be published in Spring 2024. 

This provides an excellent opportunity to go further and faster with ambitious aims and rapid action. We are recommending this includes:

• Building the UK as a leading centre for blockchain and digital assets 
• Delivering the next phase of Open Banking and clear plans for Open Finance
• Implementing a joined up and tech-enabled anti-fraud strategy
• Developing regulatory culture and capability to support innovation

In December we submitted a comprehensive paper to HM Treasury as input to their strategy  This sets out recommendations for how to further maximise the huge opportunity for Fintech to continue to create UK jobs and GDP growth in its own right and to support growth and productivity across other sectors.  We will be engaging further with HM Treasury to help shape the strategy in the run up to expected publication in April.

2. Delivery

We will be pushing for delivery of commitments by regulators and government including:

• National Payments Vision, with a clear and rapid definition of short term infrastructure updates required to support innovation and a longer term infrastructure plan
• Open Banking: With FCA taking charge from the ineffective JROC, we need to see rapid progress on implementation of proposals sitting in the in-tray (Transaction Risk Indicators, levelling up and information flows) and ensuring launch of wave 1 of Commercial Variable Recurring Payments in Q3 with an independent and inclusive operator and  cross-industry implementation of the API standards. We also need FCA to engage further on the longer term commercial model, identifying an approach which supports and incentivises commercial schemes and new entrants and is equitable for FinTechs. 
• Investment: increasing UK pension investment in UK equities, including further alignment of British business bank programmes to support this; and launch of PISCES (the Private Intermittent Securities and Capital Exchange System) with FCA and HMT putting final rules and framework in place in H1 2025 to enable operators to set up platforms.  
• Fraud: spotting and stopping fraud through data sharing. The PSR failed to progress arguably the most important workstream on fraud: data sharing to prevent fraud. Now that the FCA has taken responsibility for a cross-sectoral approach to tackling fraud, we need to see a rapid, practical and inclusive approach developed and implemented. We also need to see a truly independent review of the PSR reimbursement rules in 2025.
• Crypto asset roadmap: after significant delays in progressing regulation of digital assets, the UK now has the opportunity of ‘second mover advantage’ but we can’t afford any further slippage. What’s more,  the new regime must support UK growth and competitiveness - we need HMT and FCA to agree a distinctive UK approach which clearly demonstrates how the UK regime will be better than the EU’s MiCA.

3. Innovation by regulators

We have identified three pillars to a new approach from the regulators, which would eliminate barriers to growth and supercharge our FinTech sector:

Be ‘tech positive’ - think FinTech first including: more dedicated supervisory or support teams;  secondments and interchange with industry; cost-benefit analysis to include FinTech and RegTech tests; proactive promotion of  RegTech; and a shift in mindset to treat technology as an opportunity rather than a risk.

Do things faster and more strategically:  The regulators, as well as government, have a significant role to play in developing ambitious plans for the UK to be the global centre of FinTech in key areas like open finance and digital assets, and for much of the delivery agenda listed above. Faster and better authorisation and approval is also high on the list of FinTech asks.

Removing outdated regulation and barriers to growth: scrap reporting requirements that are no longer relevant or duplicate other activity; more flexibility in SMCR; streamline the consumer rule book; introduce presumption that consumer duty provides basis for any extension of regulatory perimeter and presumption against additional detailed rules. 

Nikhil Rathi’s letter this week to the Prime Minister signals some progress on this and we will continue to make the case for even more. The House of Lords Financial Services Regulation Committee inquiry has also been playing an important role in exploring how the regulators can best support growth and competitiveness and we have submitted extensive evidence and recommendations for regulatory reform, drawing on  the experiences of our members. 

Our 2025 activities: Policy, Insight and Engagement

We will be acting for and with FinTech firms to secure substantive progress on all these points. As always we will have a packed programme including:

Policy: as well as continuing to advance our Plan for Government we will continue to shape ‘in train’ regulatory proposals. Last year responded to 40 consultations and requests for policy input, which you can see here. 

We start 2025 with engagement on FCA proposals for regulating BNPL; crypto assets and stablecoin (working with the Digital Pound Foundation); reform of the Financial Ombudsman Service;  PRA capital requirements and challenger banks; next steps on open banking and open banking payments; and continued work on reform of the Credit Information Market and Consumer Credit Act. Looking ahead we will be seeking to shape a UK strategy for open finance and smart data as well as advancing digital ID and continue to work with the City of London on RegTech on advancing UK RegTech. 

Overarching all of this we will be engaging on the National Payments Vision (I will be attending the first meeting of the new HM Treasury and Bank of England engagement group this week) and on the HMT Financial Services Growth and Competitiveness Strategy. 

Insights:  as always we will have a programme of thought leadership and research with our members and partners and regular updates and analysis on latest developments. As well as our investment report and more investment deep dives we’ll continue to provide insights on the impact of FinTech and build on our FinTech Plan for Government with more detailed proposals on tackling fraud and on making the UK the leading centre for digital assets. 

This builds on our thought leadership and insights in 2024 that included Regulatory Outlook with Deloitte, our election newsletters and webinars, and reports on RegTech with City of London, Open Finance with KPMG, and FinTech Impact with Accenture and Vested Impact. 

Engagement: last year we hosted 36 roundtables where our members engaged with  Ministers, regulators and senior civil servants. 

This year we have even more ambitious plans, including roundtables this month with Therese Chambers on FCA enforcement; a new series of joint roundtables with Digital Pound Foundation, where members can talk to the regulators about digital money and payments; challenger bank meetings with the PRA and with the FCA in February; and followed as always by policy roundtables at IFGS in April. 

The FinTech APPG kicks off in Parliament this week with a session on future regulatory landscape and future meetings will include open finance, RegTech, AI skills and financial inclusion. We will also continue to ensure CEO, founder and senior leadership engagement with policy makers and Ministers through the FinTech Strategy Group and the Unicorn Council.

I am particularly excited by the opportunity to develop the Digital Pound Foundation programme, as they join Innovate Finance this year, to maximise our impact on advancing digital money and payments.

We have ambitious plans to grow our influence and advocacy in 2025. We can only do so with your support. We uniquely represent  innovators across the whole of finance services -  including  payments, open banking, blockchain and digital assets, challenger banks, regtech, and consumer credit. We want to do even more and as part of this we are growing our ‘vertical’ programmes including regtech, digital assets, open banking, payments and challenger banks. We know innovators need a voice of their own and we are the trade association where FinTechs set the agenda; whilst we collaborate with other trade associations and with financial institutions and tradfi, our policy work is driven by our FinTech firms and we put their interests first.

Do get in touch with me or one of the team (details below) if you'd like to get more involved in our policy and advocacy work. We look forward to working with you this year.

Adam Jackson

Chief Strategy Officer, Innovate Finance

Got views? Get in touch

If you have views or questions, please feel free to email us at policy@innovatefinance.com and sign up to our policy newsletter here.

Innovate Finance policy team

Adam Jackson - Chief Strategy Officer

Andy Thornley- Head of Regulatory Affairs

Mike Carter - Senior Policy Advisor

Megan Jenkins - Policy and Public Affairs Manager

Christopher Foo - International Policy Associate