Legal Awards 2022

Legal Awards 2022 | 5 Best FinTech Regulatory Compliance Lawyer – Colin Ngan Woolard Review. The BNPL industry needs a modern framework to ensure the highest protection for consumers and foster innovation and competition among providers. With consumers voting with their feet, UK regulators are in a unique position to help them make better credit choices. Increasingly the traditional model looks broken. A 2016 investigation into the banking market by the Competition & Markets Authority (“CMA”) found that banks with higher market share tended to charge more than smaller banks, and that few consumers responded to price or quality, suggesting a lack of effective competition. Many of these banks have dismal ratings on the online review site Trustpilot, with complaints of “diabolical” or “zero” customer service. At the same time, regulators are also pushing for even more competition. Fintech has thrived in the UK in part thanks to a supportive regulatory environment that has promoted innovation. In 2016, the FCA set up a regulatory sandbox to let businesses test new ideas with real consumers. Open banking, which allows third-party apps to access consumer accounts for banking services, has had some success so far – there are three million users in the UK and hundreds of apps in the ecosystem. But as the CMA points out, more needs to be done to loosen the grip of the large banks on the high street. Though many have embraced open banking, the largest may also “have an incentive to slow the further development of the open banking ecosystem, where this conflicts with their own commercial objectives”, according to the CMA investigation. More can be done Fortunately, this has not put off a new wave of fintechs intent on offering consumers a better experience. Although the challenger banks are making some headway and have undoubtedly brought a new level of customer service to the market, people are not yet ditching their traditional bank accounts. Challengers have thus far failed to make a large dent in the core services offered by incumbent banks. People still primarily get their salaries paid into traditional bank accounts and use a challenger account as an add-on facility – spare cash for discretionary spending or the setting of weekly budgets, for example. There is ample room to grow. The UK consumer is already digitally savvy and has embraced fintech, with 71 per cent of the population using fintech products. The highest demand is for money transfer and payment services. Small and medium-sized enterprises (“SMEs”), however, have been slow to embrace fintech, with an adoption rate of just 18 per cent – below the global average of 25 per cent, according to an EY report on the UK fintech landscape. There is also much to do if the UK aims to maintain its lead in fintech, as highlighted by the government-commissioned Kalifa Review of UK Fintech. The review sets out a sensible strategy to strengthen the sector by helping fintech companies scale their technology and list their shares, as well as make it easier to attract and retain talent through visas, among other policy recommendations. Encouragingly, the Chancellor of the Exchequer expressed an intention to implement many of these recommendations, putting the UK “at the front of the pack for fintech innovation”. Following the Woolard Review, HM Treasury launched a consultation on the regulation of BNPL, seeking a proportionate approach with objectives to: ensure consumer protection, while at the same time promoting consumer choice; not adversely impact competition and innovation; and not disadvantage SMEs over larger retailers offering BNPL as a payment option. The International Monetary Fund’s 2022 Global Financial Stability Report also argued for proportionality; that even if regulation should deliver a level playing field, “the scalability of technology-enabled business models allows fintechs to grow fast, putting pressure on incumbents” – thereby necessitating enhanced supervision of “less technologically advanced banks, as their existing business models may be less sustainable”. These forces—more competition from fintech, and smart policies and regulation—will shape a better financial system that protects consumers and businesses while giving them choice and access to technology to manage their finances. And the most important part – this will ultimately mean less bank profits and more money in consumer pockets. Since 2005 Klarna has been on a mission to revolutionise the retail banking industry. With over 147 million global active users and two million transactions per day, Klarna is meeting the changing demands of consumers by saving them time and money while helping them be informed and in control of their personal finances. Over 400,000 global retail partners have integrated Klarna’s innovative technology to deliver a seamless shopping experience online and in-store. With over 5,000 employees, Klarna is active in 45 markets and is one of the most highly-valued private fintechs globally, with a valuation of $45.6 billion. For more information, visit