UK Fintech Sector Urges Policy Reform to Sustain Global Leadership

Recent policy recommendations from prominent fintech entities, including Monzo, Revolut, and The Tony Blair Institute for Global Change, highlight concerns about the UK’s standing in the sector despite a resurgence in funding.

According to two major fintech policy reports released this week, the UK fintech sector raised $1.4 billion in the first quarter, reclaiming its position as the most-funded tech sector in the country.

The Tony Blair Institute for Global Change, in collaboration with the Startup Coalition, published the “Progressive Vision for Fintech” report, aimed primarily at a post-general election Labour government. The report emphasises the need for a review of financial incentives delivery mechanisms, such as R&D tax relief and Enterprise Investment Scheme (EIS) support.

Highlighted in the report is the concern over delays in processing applications, with HMRC facing criticism for lengthening processing times. Small businesses, the report notes, encounter uncertainty regarding their eligibility for support.

To address these challenges, the report recommends widening eligibility for investment incentives and streamlining the review process. It also advocates for government support in bolstering UK fintech’s international presence, proposing the inclusion of open banking rules in global trade agreements.

Further recommendations entail aligning Treasury documents with those of the Financial Conduct Authority to enhance policy and regulation visibility, increasing resources for regulators, and empowering financial regulators to oversee AI implementation in the sector.

The report also urges expedited action on regulating buy now pay later schemes, combating authorised push payment fraud, and accelerating the implementation of mansion house reforms to channel pension funds into innovative enterprises.

In a separate initiative, the Unicorn Council for UK FinTech (UCFT), representing major UK fintech players including Monzo, Revolut, Zilch, and ClearBank, released a report calling for governmental reform in the fintech landscape.

The council echoes calls for expanded EIS and R&D tax relief support but emphasises the need for explicit inclusion of fintech within R&D credits, citing underqualification despite the sector’s innovative nature.

Additional recommendations put forth by the council include abolishing stamp duty, enhancing tax relief for asset sales, and introducing a VAT rebate scheme for early-stage fintechs.

Philip Belamant, co-founder and CEO of Zilch, emphasised the UCFT’s mission to develop comprehensive policy guidelines, underscoring the importance of government, regulatory, and ecosystem cooperation in sustaining fintech success on a global scale.