The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have joined to open up a “Scale Up Unit” with a mission to support regulated firms grow.
The Chancellor of the Exchequer, Rachel Reeves, shared the news during a Forum in Leeds.
The Forum focused on the North as there are many financial services firms, including banking, payments, Fintech, and insurance. The North is said to be a key hub for innovation and growth.
“With the presence of national and international financial institutions, including the FCA and the Bank of England, there are many opportunities for growth and investment for UK and international businesses in the region.”
The UK government explains:
“The Scale-up Unit will provide growing financial sector-regulated firms across the country with tailored support and guidance to help them test ideas, grow, and succeed in the UK. It will also help firms by connecting them with a dedicated point of contact to support with challenges they face as they grow. By helping firms to scale, the FCA and PRA are supporting competitiveness, growth, and innovation across the country.”
In her presentation, the Chancellor said that excessive regulation is undermining business operations.
“[The] vast number of rules makes life complicated for these businesses.”
Voicing support for the initiative was Hiroki Takeuchi, CEO of Fintech GoCardless, a firm that has an office in Leeds.
“Accessing clear regulatory guidance is a key hurdle for fintechs bringing new innovations to market. Streamlining the process will make it easier for firms like GoCardless to concentrate on serving customers and accelerating our growth plans, including our new ‘Northern Hub’ office in Leeds.”
According to the government, the Scale Up Unit will pursue the following:
- The service will open initially for fast-growing deposit-takers and insurers, before expanding to serve other financial services firms, including Fintechs, next year.
- The Unit will provide dedicated resource for fast-growing firms seeking support as they expand.
- The Sprint event will bring together industry, investors, and regulators to identify and address barriers to scaling innovative and regulated financial firms in regions across the UK.
- Fintech firms widely cite navigating regulation as a key barrier to scaling, which can inhibit investment into growing firms. The Unit will help give firms the regulatory clarity they need to support their scaling ambitions and help unlock the investment needed to plug the £2 billion Fintech scale-up funding gap, which was cited in Sir Ron Kalifa’s 2021 Review of the Fintech sector.
- To help further tackle this funding gap, the government also welcomed as part of the Financial Services Growth and Competitiveness Strategy work from the City of London Corporation and the British Business Bank to facilitate greater access to finance and commercial opportunities for fast-growing Fintech firms.
- The UK is home to more than 3,000 fintech firms, employing over 75,000 people nationwide, and attracting over $3.6 billion in investment in 2024 alone.
- Both initiatives form part of the government’s Plan for Change – going further and faster to grow the economy, create good jobs and put more money in people’s pockets.
Financial services have long been a key sector of the UK economy. Thus, any government must pursue policies that support Fintech innovation and entrepreneurship to maintain the UK’s status as a global financial center. The UK’s exit from the EU has created certain hurdles for financial services but also presented opportunities for policymakers and businesses. There just needs to be the willpower to pursue these opportunities.