Financial services and technology law specialist Yvonne Dunn of law firm Pinsent Masons, said a period of lingering uncertainty in light of the vote could weaken the attractiveness of the UK as a hub for financial technology innovation and investment.
A range of factors have contributed to the UK, and London in particular, having developed into a centre for fintech innovation. The FCA is widely recognised as leading the world in terms of a progressive approach to fintech regulation and in engaging with fintech start-ups eager to operate in the UK market. It is one of the main reasons why fintechs looking to set up in Europe choose to base themselves in London and not other financial centres.
However, other important factors include the fact that, through the EU’s passporting regime, which provides mutual recognition of regulatory authorisations across EU countries, fintech providers based in London can gain market authorisations to operate across the European market quickly and easily. In addition, the EU’s rules on the free movement of workers across the trading bloc means fintech companies have been able to attract talent from a larger pool of people than is available within the UK alone.
There is now a need for the UK government to quickly negotiate and agree a system that replicates the benefits of passporting and free movement of workers, before other financial centres in Europe look to exploit any lingering uncertainty about the environment in which UK-based fintechs will be operating in.