In a recent speech before the Swiss Finance Council, EC director-general in the financial stability, financial services and capital markets union Olivier Guersent confirmed the newly minted task force would be “closely monitoring” fintech businesses around the world.
Formed last November, the task force is comprised of experts overseeing technological developments, data and competition issues to promote a level playing field between market participants.
“EU financial legislation is activity-based, and therefore any firm carrying out a specific regulated activity has to comply with the relevant EU rules, in a proportionate manner of course,” he said.
“‘Same activity, same rule’ and ‘proportionality’ together ensure a level playing field between all market participants.”
At a time when there is so much cross-pollination between the finance and tech sectors, certain “innovative,” hybrid institutions may find it harder to identify the “relevant framework,” Guersent said.
As such, the task force has been charged with determining whether existing EU policies are fit to regulate these newer entities or whether brand new licensing and passporting regimes need to be introduced - a course of action already being pursued by the Swiss government.
Guersent added the EC’s task force would be mindful of preserving the innovation and natural competitiveness of the fintech industry.
“Although this may appear somewhat unusual for the Commission as we are not supervisors, the task force is also looking beyond regulation to understand the impact of supervisory practices,” he explained.
“Innovative firms, regardless of whether they are startups or already established on the market, regularly express concern that EU and member state supervisory practices limit their ability to innovate and to offer services cross-border.
"They can be subject to disproportionate, inconsistent or overcautious application of regulatory requirements which were not designed for their new approaches, especially if the business model does not fit easily into the existing framework.”
The task force will also be looking at outsourcing practices between financial services and technology companies, identifying it as another area where “operational and supervisory challenges” can arise.