The King's Speech introduced several significant legislative measures that will impact the FinTech sector in the UK. From the Digital Information and Smart Data Bill to the Pension Scheme Bill, these changes are poised to shape the future of FinTech.
Here’s our summary on what fintech companies need to know about these proposed laws and their potential implications.
Digital Information and Smart Data Bill
A big positive of the King’s Speech is the introduction of the Digital Information and Smart Data Bill. This bill builds on the previous Data Protection and Digital Information Bill and is a crucial component of the government’s FinTech Plan. Key provisions include:
Smart Data Schemes: The bill will create Smart Data schemes, enabling the secure sharing of data across different sectors, including finance, energy, and transport. This initiative aims to promote innovation and enhance consumer choice.
Digital Identity Products and Services: The bill will extend the scope of digital identity products and services. This is expected to streamline verification processes, combat fraud, and widen access to financial services.
For FinTech companies, these measures mean greater opportunities for developing innovative solutions that leverage open banking and smart data. However, firms must ensure robust data protection and compliance mechanisms to align with the new regulations.
Investment measures
The King’s Speech outlined several measures to boost investment in growth firms, including FinTech:
Pension Scheme Bill: This bill aims to support consolidation in the pensions market, allowing larger funds to invest more productively in UK equities. This could potentially unlock significant institutional investment into FinTech companies.
National Wealth Fund Bill: The establishment of a £7.3bn National Wealth Fund will be facilitated through this bill. Managed by the British Business Bank and the UK Infrastructure Bank, the fund is designed to support investments in industries of the future, including FinTech.
These measures indicate a supportive environment for FinTech investments, encouraging firms to focus on long-term growth and innovation.
Artificial Intelligence (AI)
Despite the absence of a dedicated AI Bill, the government has committed to establishing appropriate legislation for developing powerful AI models. The Digital Information and Smart Data Bill also mentions targeted reforms to data laws to aid the development and deployment of new technologies.
For FinTech companies, this suggests an impending framework for AI governance, which will likely emphasize data protection and ethical AI deployment. Companies should prepare for forthcoming regulations by investing in responsible AI practices and robust data management systems.
Bank Resolution (Recapitalisation) Bill
The Bank Resolution (Recapitalisation) Bill aims to expand the statutory functions and levy-raising powers of the Financial Services Compensation Scheme (FSCS). This will enhance the Bank of England’s toolkit for responding to bank failures.
FinTech firms should note the potential increase in costs associated with the FSCS levies. While the industry broadly supports these measures, clarity is needed on how these costs will be distributed, especially for banks already facing increased expenses.
Other relevant bills
Several other bills from the King’s Speech will have implications for the FinTech industry and worth taking note:
Employment Rights Bill: This bill will introduce measures such as making parental leave, sick pay, protection from unfair dismissal, and flexible working available from day one.
Skills England Bill: This legislation will reform the Apprenticeship Levy into a Growth and Skills Levy, aligning government-funded training with skills needs.
Draft Equality (Race and Disability) Bill: The bill will mandate ethnicity and disability pay reporting for larger employers, promoting equal pay.
Draft Audit Reform and Corporate Governance Bill: This bill will establish a new regulator to oversee financial reporting and corporate governance, enhancing transparency and accountability.
The legislative agenda set out in the King’s Speech highlights the Labour government’s commitment to fostering a robust and innovative FinTech sector. The new bills present opportunities for growth and innovation and for any FinTech companies looking to capitalize on this, do get in touch.
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