One thing is certain: if FinTech companies have a significant capacity to innovate and compete in the financial services sector, they also raise a number of concerns in terms of regulation and consumer protection.
Speaking at the FinTech Forum in Montreal this fall, Jean Lorrain, senior director, International Relations and Strategic Monitoring at Quebec regulator, the Autorité des marchés financiers (AMF), said he believes that the adoption and development of technological innovation will create challenges. He adds that the regulator is obliged to adapt so that it can “better understand in order to make better changes.”
“Several years ago, the industry and the AMF adapted to the digitization of financial markets. The difference today is that the avenues of change are very diverse,” he said. “We see innovation not just from market participants, but also from other players, especially start-ups, from outside of the financial markets.”
Lorrain is also in favour of graduated regulations. In his opinion, a leading financial institution and a start-up cannot be treated in the same way.
Finally, asked to respond Eric Stevenson’s position – the AMF superintendent who recently told The Insurance and Investment Journal that the provincial regulator would not accept advice provided by robots – Jean Lorrain admits that the regulator has no choice but to reconsider its position and to “make the necessary adjustments.”
Scott Hendry, special director for Financial Technology at the Bank of Canada, suggests that FinTech could affect not only monetary policy but also the way the financial system operates. Hence the need for regulation and evolution from the regulator to “ensure consumer protection by controlling risk.”
Proof that the subject is more relevant than ever for Quebec’s regulator, the AMF recently decided to establish a working group on FinTech with a primary mandate to analyze technological innovations in the financial sector and anticipate regulatory and consumer protection issues.
“We want to improve our understanding”
“With the creation of the FinTech working group, the AMF confirms its willingness to be a first-class partner and a reference to all industry stakeholders who are interested in technological innovations in the financial sector,” commented the AMF’s CEO Louis Morisset in June. “Many issues and questions emerge with FinTech and we want to improve our understanding of them to ensure that, over time, Quebec’s regulatory environment responds appropriately.”
The AMF’s working group on FinTech intends to “analyze and make appropriate recommendations regarding the ability of the regulatory framework to accommodate changing business practices, business models, and technology in the financial sector while ensuring a balance between adequate consumer protection and market efficiency.”
In addition, the AMF has also announced the establishment of a Technological Innovation Advisory Committee (TIAC) whose work will be linked closely with the mandate of the FinTech working group.