FCMC open to innovative and well-considered financial solutions entry

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Riga 29.06.2017

Press Release

 

FCMC open to innovative and well-considered financial solutions entry

 

On 29 June 2017, a meeting with financial market participants and industry experts was held within the framework of series of debates "FKTK Dialogs" (FCMC Dialogue) to discuss the opportunities for innovative financial services development. The Financial and Capital Market Commission (FCMC) is planning to create the regulatory "sandbox" attractive to FinTech or innovative financial services, thus supporting an entry of innovative and well-considered financial solutions into the market.

 

One of the purposes of discussion on the financial sector opportunities for innovations in Latvia was seeking constructive proposals regarding the type of regulatory sandbox program that would be most relevant for Latvia's financial sector and its key contribution. In view of FCMC, a sandbox testing regime should be offered initially to innovative payment services, and after that taking into account demand it could be further introduced into other financial service segments. The needs of market participants have been identified through the "FCMC Dialogue" in order to set up the actually operating regulatory environment and find a balance between regulatory requirements, consumer rights protection and support for innovative financial services.

 

“The risks not yet identified and impacts on the market are key prerequisites why the regulators worldwide normally have been rather reserved as to granting authorisation for the provision of innovative services. That is why an increasing number of national financial regulators are starting to offer regulatory sandboxes to facilitate the implementation of innovative ideas that otherwise could be difficult to realise. However, participation in the sandbox does not mean operation without a licence in any of those countries. The FCMC objective is to create the sandbox that would actually function and serve as a springboard for the development of ideas of both start-ups and current market participants. FCMC believes that every opportunity to develop solutions that would be attractive to the global market is given to the market participants operating in Latvia – both the banks and new service providers,” says Gunta Razāne, FCMC Deputy Chairwoman.

 

An innovative financial service by use of the latest technologies offers a wider range of options and a new digital experience to the customers, for instance, provision of a pioneering service in Latvia allows for offering a less expensive product thereby increasing the market competition. The FCMC would like to initially test such innovative payment services under the regulatory sandbox regime. This would be a compromise between a risk-based, legally correct approach and support for financial innovations, therefore a potential applicant should have to obtain a relevant licence before "playing" with the customer's funds. This would also mean a proportionate application of regulatory framework – there would be grounds for exemptions from the requirements that have not been laid down in the EU legislation.

 

The crowdfunding services are also an innovation offered in the financial sector and the FCMC has already pointed out the necessity for the development of relevant regulatory framework at EU level; moreover, the FCMC experts participate in the working groups on drafting the national regulatory framework.

 

The FCMC has been already offering individual advice to innovative companies on the application of legislation during the authorisation process. The providers of new services may also rely on the FCMC support and close monitoring while acting in testing mode, where necessary. There have been allowances laid down in the Law on Payment Services and Electronic Money for consideration of the documentation submitted by the providers of new services and their supervisory fees.

 

"FCMC Dialogue" is a new debate platform to facilitate the dialogue with the market participants on key issues related to the development of financial sector.

 

Further information:

Laima Auza

Head of Communications Division

Financial and Capital Market Commission

Phone: +371 67774860, +371 26148001

 

E-mail: laima.auza@fktk.lv