With the general election just days away, the incoming government’s legislative agenda, to be introduced on 17th July, is highly anticipated.
Key items that should be included are a new Smart Data Bill, Digital Assets Bill, National Payments Vision, and a robust framework for regulating AI. In the absence of government action, I am prepared to reintroduce my private member’s bill on AI regulation.
Future of Finance
The UK has established itself as a fintech hub due to its innovative and trustworthy regulatory environment, favorable investment landscape, and educated population. These elements have allowed fintech companies to thrive, secure funding, and attract tech-savvy consumers. It is crucial for the UK to maintain its leadership in adopting new financial technologies.
Both major political parties have pledged to support innovation and growth through regulation. Labour aims to ensure that economic regulation promotes growth, competition, consumer interests, and innovation. Similarly, the Conservatives focus on reducing regulatory burdens to help businesses thrive, while also protecting consumers. Despite these commitments, both parties’ manifestos lack detailed plans for achieving these goals. Here are my legislative recommendations for the new government.
Smart Data
The Data Protection and Digital Information Bill was lost when the general election was announced, leaving a gap in regulatory clarity around smart data. The UK has the potential to pioneer a smart data economy. Building on its leadership in open banking, the UK can advance towards open finance and a broader smart data economy.
I support Innovate Finance’s three-part proposal:
- A 5-year roadmap to extend open banking to open finance, making financial data available across all sectors, including credit, savings, mortgages, and insurance, by 2030.
- A 10-year plan to extend smart data across the UK economy, integrating financial data with other sectors like energy.
- Establishing the right infrastructure with interoperable standards and data exchange, including digital identity verification, to ensure competition and fair access.
The increasing digitalization of market infrastructure could also facilitate the adoption and understanding of digital assets and tokens.
Digital Assets
The UK’s common law tradition is agile and internationally respected. The Law Commission, an independent body, has been working on the legal treatment of digital assets, such as crypto-tokens and other forms of digital property, which do not fit neatly into existing legal categories. The Law Commission proposes recognizing a new class of digital assets that meet specific criteria, neither “things in possession” nor “things in action.” This would provide a clear legal framework, ensuring security and clarity for users and markets.
National Payments Vision
The Independent Future of Payments Review (2023) highlighted the need for a clear strategy in the UK’s payments landscape. The government has committed to publishing a National Payments Vision to maintain the UK’s reputation for a world-leading payments ecosystem. A clear vision is essential to outline the new government’s ambitions for UK payments.
Addressing fraud is a top priority for financial services. The next government must tackle fraud holistically by engaging all relevant stakeholders and focusing on solutions that address online fraud at its source.
AI Regulation
My private member’s bill on AI regulation was introduced to push the government to consider practical aspects of AI regulation. The bill aimed to establish statutory AI principles, propose an AI authority to enhance regulatory capabilities, and ensure consent, respect, and remuneration for IP and copyrighted content used to train AI models.
Currently, AI regulation relies on voluntary industry initiatives and overstretched regulators like the FCA, BoE, PRS, and ICO. This is insufficient, and many UK-based organizations are looking at the EU AI Act for guidance. My bill included provisions for regulatory sandboxes, which have been highly successful in fintech since their introduction in 2016.
The UK has the talent and technology needed for financial services innovation. What we need now is leadership from the new government to harness these opportunities for economic and social benefits for all.
Source: finextra.com
