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Government and regulators ‘asleep at the wheel’ as UK risks fintech lead

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Rachel Kent, senior partner at Hogan Lovells, says action is needed to boost London's capital markets this year.
Rachel Kent, senior partner at Hogan Lovells, says action is needed to boost London's capital markets this year.

THE UK risks losing its lead in the race to be the globe’s fintech capital, founders of some of the UK’s most innovative finance firms have warned.

One warned that the government was “asleep at the wheel” and not moving quickly enough to update the rule book.

According to the Fintech Founders Summer Survey, in partnership with Binance, nearly 90 percent of founders said they lack confidence in the future of the UK economy. 

Scarcely a third believe Britain is the current fintech world leader, down from 56 percent last year and under 10 percent of founders think the UK is a leader in crypto. 

The survey’s findings should “serve as a wake-up call to the new Government”, says Christian Faes, co-founder of LendInvest and Chair of Fintech Founders.

“The voice of founders and entrepreneurs cannot be ignored if this country is to retain its status as an attractive and competitive market”, he adds. 

Over 40 percent of survey participants reported that insufficient access to funding was the number one obstacle to growth and over a quarter want the Government to speed up delays through improved resourcing of the FCA. 

Commenting on the results of the survey, Nelson Wootton, the Founder and CEO of SaaScada, and a member of Fintech Founders, says “the FCA and other policy-makers are asleep at the wheel and unless they wake up fast, we are going to lose our fintech crown. 

“It’s about actions, not words – the FCA need to pull their finger out and make sure the UK is the best place in the world to be a fintech.”

The City’s fintech community is waiting for details of new Chancellor Kwasi Kwarteng’s ‘Big Bang 2.0’ plans for the Square Mile.

In a nod to Margaret Thatcher’s 1980s-era moves to give the City more scope to innovate, the new Chancellor promised to bolster the financial services sector’s productivity and growth through a post-Brexit deregulatory drive. 

In an emergency mini-budget on Friday, Kwarteng is expected to reveal a network of low tax and low regulation investment zones which aim to increase the competitiveness of the UK economy. 

The survey also highlights how most fintech founders are worried other countries are overtaking Britain on the crypto frontier too, unless it can capitalise on the potential of crypto.

Daniel Trinder, Vice-President of Government Affairs at Binance (UK), says: ‘It is clear from this latest survey that crypto is increasingly going to transform the fintech sector, with founders seeing it as an opportunity for their businesses.”

Almost 6 in 10 founders believe crypto provides an increasingly favourable window for their business, however, the regulator “appears to be actively signalling that the UK is not the place to start a crypto company,” say 2 in 10. 

To make Britain look more appealing to crypto start-ups, those surveyed think the Government should adopt and prioritise a greater ‘pro-innovation approach’, lowering the FCA registration bar and overhauling tax barriers.

Trinder says policymakers are not taking advantage of crypto as much as they could: “If the Government is serious about supporting innovation, then it needs to start listening to founders and taking their views on board.”

Over half of founders felt their voice was somewhat ignored in policy and regulatory circles, the survey discovered.