Regulatory perimeter, regulatory status and authorisation approaches in relation to FinTech activities
The European Banking Authority (EBA) published the findings of its analysis on the regulatory framework applicable to FinTech firms when accessing the market. The report describes the developments on the regulatory requirements across the EU, the regulatory status of FinTech firms, and the approaches followed by competent authorities when granting authorization for banking and payment services. EBA findings show a few national legislative developments that could potentially create an "unleveled" playing field in EU.
The analysis of the national regulatory status of FinTech firms with innovative business models or delivery mechanisms shows two developments:
(1) the move of certain activities – notably payment initiation services and account information services – from not being subject to any regulatory regime to being subject to PSD2 after its transposition into national law; and
(2) with the exception of crowdfunding and to some extent activities related to crypto-assets, the ancillary/non-financial nature of the services and activities provided by FinTech firms not subject to any regulatory regime.
With regard to authorization approaches under the current EU legal framework, the findings on the application of the principles of proportionality and flexibility under CRD IV and PSD2 suggest that there is consensus on considering the principle of proportionality to be embedded in the current EU legislative and regulatory framework. Similarly, there is consensus that the principles of proportionality and flexibility are applied in the same way irrespective of whether the applicant presents a traditional or innovative business model and/or delivery mechanism.
As regards crowdfunding services and peer-to-peer lending, it is noted that these activities are carried out by firms within the sample that are not subject to any regulatory regime. In general, such activities present features of financial services and activities and it is opportune that they are regulated to ensure consumer protection and AML/CFT controls. From an EU perspective, it is desirable to level the playing field. Such distortions are meant to be remedied by the Proposal for a Regulation on Crowdfunding service providers conducting cross-border business that is currently pending before the EU legislature.
The report is available here.