Financial Services Regulation Committee
Wednesday 21st October 2026
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11:34
Speaker 1
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Speaker 1
Note for the regulatory sandboxes, but for. regulations that encourage more innovation like open banking or open. I think particularly when it comes to fintech space, we're trying to do something similar for open finance, open data within financial services. I think there is lack of data that we can access to try and establish that. I think the FCA, of course, sits in this data and urge them before to kind of try and share a bit more with us in a, in a safe way so that we can do some of the.
independent .
independent .
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Speaker 2
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Speaker 2
Oh, sorry. Can you hear me? Yes, yes. Yeah, definitely. So one of the. challenges with a sandbox is that it's supposed to be sort of a. temporary thing, right? That it's a period within which there are fewer, there's, there's less risk of enforcement. Some of the regulatory barriers to entry are brought down. And that's supposed to sort of be a finite period of time for the. participants to learn how to operate in a regulated. environment and from the regulator, for the regulators to learn how to regulate going forward. That's the idea. The challenge is, and I think some experience with the Canadian securities regulators is very is is very important to acknowledge here.
The challenge is that what happens often is that you get to the end of that temporary.
The challenge is that what happens often is that you get to the end of that temporary.
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Speaker 2
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Speaker 2
Because the regulators didn't want to shut them down. So that's problematic for a number of reasons. One of which is that because the conditions within a bespoke within a sandbox are bespoke to the individual firm, that means you have different firms. operating at. different legal. environments in perpetuity. And so generally speaking, I'm very. concerned about the the sandbox being the way in which AI regulation is formulated. And I would say that actually you can live without sandboxes quite easily, and I think should for a number of reasons. One, when you have a sandbox out there, what it says to firms is don't bother trying to comply with the laws.
We've acknowledged that the laws aren't right for you. So come on in. The water is fine, right? If the decision is that the laws aren't fit for purpose, then I think that can be done through waivers and things that apply across the board. And then you avoid the issue of picking winners. So I'm very concerned about sandboxes being the space in which AI regulation is.
We've acknowledged that the laws aren't right for you. So come on in. The water is fine, right? If the decision is that the laws aren't fit for purpose, then I think that can be done through waivers and things that apply across the board. And then you avoid the issue of picking winners. So I'm very concerned about sandboxes being the space in which AI regulation is.
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Speaker 1
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Speaker 1
And so that they, they don't have kind of issues or challenges kind of complying to, to future regulation when they, they take their products to market. I think there's a few things that one, one can do to, to accommodate that. My concern is, is mostly in the nature of artificial. intelligence as a technology, which is. qualitatively quite different from other.
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Speaker 1
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Speaker 1
Let's say, number of. users . And artificial. intelligence kind of relies more particularly gen AI relies more on open systems where a lot of data sources come from. Different, different sources, basically, which, you know, can cannot necessarily be controlled within the. regulatory sandbox environment. So in that case, maybe. different kind of techniques should be implemented to be able to understand how AI can be utilized within financial services in a more kind of rigorous, but also safe way.
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Speaker 2
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Speaker 2
A lot of these. jurisdictions have been. adopting regulatory sandboxes as a signalling device to say, you know, we are. welcoming fintech businesses. And a challenge with that is that that delivers diminishing marginal returns, the more. jurisdictions opt into it. And so some of the reporting that's been done on the international level suggests a little bit of buyer's remorse. There was, I think, a failure, and I don't think this is true of the UK, but in many.
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Speaker 2
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Speaker 2
There was a failure to appreciate how. expensive these regulatory. sandboxes are to adopt. I think it was sort of thought of as a we can just say we'll have a sandbox and that'll be enough to attract new business, but in fact, they're quite. expensive to to implement because really the je NE sais quoi of these is a lot of regulatory hand-holding. And some of the research that's being done says that if you don't have that regulatory.
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Speaker 2
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Speaker 2
Then the actual firms themselves are less likely to succeed. So it's not just the. dispensations from, from law that that help. It's it's that. guidance and that guidance is expensive. So we have definitely seen some buyer's remorse. We have definitely seen. diminishing marginal returns as more and more. jurisdictions have tried to deploy sandboxes. I think, you know, the UK is first mover in this space, is not is somewhat immune from from those of those those concerns. But I think, you know, fintech sandboxes had lost some of their luster around the world. But it's, you know, the previous question was about AI.
And I think we're seeing a resurgence of, of interest in AI being the.
And I think we're seeing a resurgence of, of interest in AI being the.
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Speaker 1
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Speaker 1
I think what we've witnessed is in some cases the development of regulatory. sandboxes and particularly towards kind of giving access to, to data. So I guess a natural. Following device would be the digital sandboxes that even the FCA has experimented with. So that's kind of giving access to consumer data coming from synthetic databases. So that's one of the trends we've kind of identified. And I think that as a vehicle has been used by different regulators around the world as well. The other thing is, I think the openness and realization that, of course, the financial system is an international system by default.
So you can't really isolate a particular economy or system by itself, because there's a lot of international markets that big players, you know, within a particular economy want to be part of like financial markets and payment infrastructure as well. So we have seen a shift towards more. international kind of communication, trying to develop standards and innovations that that are basically on par with other.
So you can't really isolate a particular economy or system by itself, because there's a lot of international markets that big players, you know, within a particular economy want to be part of like financial markets and payment infrastructure as well. So we have seen a shift towards more. international kind of communication, trying to develop standards and innovations that that are basically on par with other.
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Speaker 2
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Speaker 2
Of having sort of firms locked in, in perpetuity into less regulated environments. And it may be that regulators discover through this process that there are regulations that don't work for a particular business model, and they may decide that that business model is so valuable. And I don't think you should assume that all business models are valuable. But if they do decide that that business model is so valuable that it should be. allowed to flourish and that there is some some. regulation that needs to be pared back in order to let that happen, then they can issue a broad based waiver rather than having bespoke waivers that are sort of favouring the firms that are able to get into the sandbox.
And I should note that a real challenge or problem, I think, with these sandboxes, is that there's rarely any formal. criteria for who will be accepted into the sandbox. You might have some sort of high level thoughts or criteria.
And I should note that a real challenge or problem, I think, with these sandboxes, is that there's rarely any formal. criteria for who will be accepted into the sandbox. You might have some sort of high level thoughts or criteria.
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Speaker 1
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Speaker 1
To be fully transparent, we we haven't focused in the research that we've done in one. particular case study that went through the regulatory sandbox and kind of observed them kind of over time. But my understanding is, even if you look at only the UK FCA regulatory sandbox, there is quite a few of the big fintechs that are now quite reputable and a lot of people use them now, whether that's can be attributed to them being through the regulatory sandbox, I guess that's the question, right? So if we knew. 100% sure that that can be attributed to their.
experience that they received through regulatory sandbox, and also that the FCA changed, perhaps adapted over time regulations to be able to encourage this kind of innovation. Then, of course, would be a, you know, much more confident and positive about the sandboxes, I think. But but that's the big question, right? How do we measure that and what kind of. information and data there is out there to, to be able to use those resources to,
experience that they received through regulatory sandbox, and also that the FCA changed, perhaps adapted over time regulations to be able to encourage this kind of innovation. Then, of course, would be a, you know, much more confident and positive about the sandboxes, I think. But but that's the big question, right? How do we measure that and what kind of. information and data there is out there to, to be able to use those resources to,
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Speaker 2
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Speaker 2
Sandbox and it went on from there? I mean, I'm not I would say that actually quite a number of the people of firms. using the FCA sandbox are already established financial institutions. So I think, you know, it's not just new startups that are participating. It's also a lot of established financial institutions as well. I want to also pick up on one of the points already raised, which is that sandboxes are challenging in an environment where. You know, cross-border operations is really the sine qua non of financial services. And there has been. attempts to create. cross-border fintech sandboxes under the the auspices of the G fin, the global Financial Innovation Network, of which FCA is a part.
They tried to run a global sandbox. They tried once. I think 1 or 2 firms got. through because. ultimately the challenge was harmonisation. Even within a global sandbox, you had to get multiple regulators to sign off on the the firm and the conditions under which it would operate. And that's just hard. And that's the same challenge you face with any kind of firm trying to operate cross-border. So I don't think regulatory sandboxes really.
alleviate that challenge. So .
They tried to run a global sandbox. They tried once. I think 1 or 2 firms got. through because. ultimately the challenge was harmonisation. Even within a global sandbox, you had to get multiple regulators to sign off on the the firm and the conditions under which it would operate. And that's just hard. And that's the same challenge you face with any kind of firm trying to operate cross-border. So I don't think regulatory sandboxes really.
alleviate that challenge. So .
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Baroness Bowles of Berkhamsted
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Baroness Bowles of Berkhamsted
I mean, obviously a. broadcast waiver is one way of of changing the law, if you can, if you can set it aside. So how how do we deal with this? How do we get I mean. transparency is meant to be the disinfectant. How can we cope with this? What what. modifications can we make? And in particular, not not. embedding model.
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Speaker 1
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Speaker 1
I think for the HCI to kind of really think about and establish the framework of. transparency that can share more. information about the process, about the lessons learned. I was I was looking for a report last night, and the only thing I could find from the FCA, I think, was the lessons Learned report that was already kind of a decade or so old, I think more kind of. systematic sharing of.
information and insight as to what's happening within the sandbox and what are the things that other firms within the UK kind of.
information and insight as to what's happening within the sandbox and what are the things that other firms within the UK kind of.
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Speaker 1
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Speaker 1
Being a fintech or incumbent financial institution that wants to experiment with new innovation they can learn from? So that's, I guess, one thing. I'm not sure how far you can go. I mean, I understand the concept of transparency, but I do also respect what you mentioned around IP. There's a few things that the regulator cannot necessarily share. because they, you know, relate, for.
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Speaker 1
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Speaker 1
Behavior or relate with particular kind of consumer information. These these are data information that cannot necessarily kind of be shared with, with public, even though we as researchers would like to have more access to data, to be able to, to assess things and understand the effectiveness of many of the things that the FCA does or the of the regulators and policy makers actually put on the table, like existing regulations like open banking, for instance. But, you know, again, there might be a way to, to try and .
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Speaker 2
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Speaker 2
Yeah. Thank you. If if you'll humor me, I think I might answer your question at a very high sort of. 30,000 foot or sorry, I should use the metric system very, very high level. And that is that I think so much of we're seeing what we're seeing right now is really a. response to a societal conviction that we should never do. anything to impede innovation. And it's actually a. paradox in many regards, because we're told that innovation is. inevitable and there's nothing that regulation can do about it. But also. innovation is so valuable and.
fragile that regulation should never take any steps to impede it. And that's the. ecosystem in which you have agencies like the FCA trying to figure out what to do about fintech innovation. It's sort of this real fear of never being in any way an impediment to that innovation.
fragile that regulation should never take any steps to impede it. And that's the. ecosystem in which you have agencies like the FCA trying to figure out what to do about fintech innovation. It's sort of this real fear of never being in any way an impediment to that innovation.
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Speaker 2
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Speaker 2
That had a very decidedly harm protective function. And so there is a very big. conversation to be had that goes far beyond sandboxes. I think about the degree to which long standing legal precedents established by Parliament and the courts should be peeled away in order to accommodate innovation. But if you have that.
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Lord Lilley
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Lord Lilley
Thank you. Lily. I'm still suffering from a lack of concrete. examples of. sandboxes and how they've been used and what the outcome is, but I hear two slightly different things. One, that they're there to help the. regulators learn how to. regulate some. innovative process. And that seems sometimes it's both, I think today and in our background research, we've heard that the regulators are using it to learn how to regulate , which this new thing is, and that seems to be broken down into two things. One, should they change the rules to make it possible if there is an.
infringement or if there's a conflict between this new process and the existing rules. And secondly, this business about learning how to. regulate some new thing, which is a bit odd to me, but and I'd like someone to explain that a bit more. What do they have to learn other than what the rules should be? And then the second we've had reference today and again previously, is that it's helping new businesses learn how to comply or helping them comply. Now, that seems to me more a sort of. concierge service. We now earlier researchers, we said the regulators shouldn't just say we're not there to help.
Those are the rules. If you break them, we'll put you in jail or equivalent. But they should actually say these rules are for this purpose. If you do this, it will comply with them. And if you do that, it won't. But that doesn't seem to me to need a sandbox. That's that's concierge.
infringement or if there's a conflict between this new process and the existing rules. And secondly, this business about learning how to. regulate some new thing, which is a bit odd to me, but and I'd like someone to explain that a bit more. What do they have to learn other than what the rules should be? And then the second we've had reference today and again previously, is that it's helping new businesses learn how to comply or helping them comply. Now, that seems to me more a sort of. concierge service. We now earlier researchers, we said the regulators shouldn't just say we're not there to help.
Those are the rules. If you break them, we'll put you in jail or equivalent. But they should actually say these rules are for this purpose. If you do this, it will comply with them. And if you do that, it won't. But that doesn't seem to me to need a sandbox. That's that's concierge.
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Speaker 1
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Speaker 1
Can you sort of guide me? I mean, that concierge you mentioned, I think was also mentioned before with the innovation hubs. I think the FCA calls them innovation pathways. There is a type of. concierge service in some ways for for new ideas to go there and approach us particular agents that the FCA will then assign to that.
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Speaker 1
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Speaker 1
And then being discussion on how they can comply with that particular innovation. I mean, that's one thing to do. I think the the regulatory. sandbox is probably a bit more. systematic in the way that also the, the FCA will use the sandbox as a learning device, which is what you referred to before to to understand a bit more how new.
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Speaker 1
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Speaker 1
Might affect financial services overall through products and services, but also through. modifications in the overall industry architecture, which is something that one of the latest papers actually pointed out. We have seen a gradual shift to a new kind of. architecture within financial services that we didn't have before, which is more modular because of new technologies like applications, application programming, interface and communication of data between.
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Speaker 1
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Speaker 1
But also institutions. So these are quote unquote deeper. discussions or reflections that the FCA develops through. conversations that they have with innovative firms, fintechs and other institutions that want to innovate and experiment with new technologies. And over time, they develop new ideas that would then potentially lead into new regulation. That doesn't happen automatically. It's not that through a particular cohort that the regulatory sandbox and the FCA comes about and says, oh, look, now we're going to do this. But I think gradually they build the intelligence through this dialogue. They are establishing with the fintechs or the organizations that are part of the sandbox in a systematic way that helps them kind of reflect.
And then, of course, as a regulatory device, which was mentioned before in the. categorization we had in our in our paper, you know, they, they also help the fintechs or other organizations kind of comply because some of the regulations are not necessarily prescriptive. So you do one, two, three, and then you're done. But they're more.
And then, of course, as a regulatory device, which was mentioned before in the. categorization we had in our in our paper, you know, they, they also help the fintechs or other organizations kind of comply because some of the regulations are not necessarily prescriptive. So you do one, two, three, and then you're done. But they're more.
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Speaker 1
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Speaker 1
That's tech sprints, regulatory tech sprints. And I think the FCA has actually used them as well, but also challenges. So the regulator might come up with a challenge and invite industry and. universities to collaborate to come up with a solution. So these are also very effective mechanisms for regulator to get that kind of.
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Speaker 1
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Speaker 1
How novel technologies can be used, and also business models and ideas that they can get from industry and universities. And I did have the opportunity to participate, but also assess through the Bank of International Settlement that I worked as a consultant for a while, assess some of these instruments like these, these challenges. So these could also be effective mechanisms. And, you know, we're not saying that regulatory sandbox are completely rubbish, but, you know, of course , there's ways that and vehicles .
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Speaker 2
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Speaker 2
Laws, you know, will, will apply to a new technology. Now, often that's interpreted as a reason to get rid of the pre-existing laws, which I think is often a mistake. I think law is often resolved through or developed through analogy. And I think what the regulators can, can learn from this is sort of where the analogies lie between what they're used to. regulating .
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Speaker 2
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Speaker 2
And there have been plenty of examples of innovation that have worked quite well and flourished in an environment of some legal uncertainty. And in fact, there's been a lot of. innovation that has flourished in response to legal requirements. In other words, you know, the law said you had to do this. You figure out the way to do it with your new technology. So while I do think, you know, there is scope for regulators to be speaking to, to firms to learn how to apply existing laws to their. technologies . that shouldn't. automatically default to those laws being peeled .
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Lord Griffiths of Fforestfach
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Lord Griffiths of Fforestfach
It may be a concierge service, my first. instinct was, why don't we. privatize it? But I that is being slightly flippant. My question is, I mean, you're both at the cutting edge of research and so on, and you both know quite a lot about the UK system. Is there anything that we can learn from what's happening in the rest of the.
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Speaker 2
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Speaker 2
They've never really taken off in the United States. The Consumer Financial Protection Bureau proposed one at one point, but it was really, I think, set up more as a. deregulatory mechanism than anything else. And it that that that happened at the end of the first Trump administration. And then it was abandoned with the Biden administration. We've seen.
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Speaker 2
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Speaker 2
Try and come up with fintech sandboxes. I think Arizona was the first. They have had very little uptake, I think, in recognition of an issue we've already talked about, which is that, you know, you want a big market for your services. And if you're just restricted to operating within an individual state, that's .
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Speaker 2
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Speaker 2
Sandboxes have not taken off in the US? Well, actually, that's a great question because most of the funding in fintech is happening in the United States. So I think what that tells you is that you don't need a. sandbox in order to, you know, if your goal is to further the fintech industry. And I'm not suggesting that it should be, but if that is your goal, fintech has flourished in the United States without regulatory sandboxes. You know, there have been other. And this is sort of where I was heading. You know, there have been plenty of other.
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Speaker 2
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Speaker 2
Particularly under this second Trump administration. All kinds of financial regulations are being rolled back to accommodate different fintech industries, particularly the crypto industries. I don't think that's advisable. But again, I would note that that. investment in, in, in, in all these fintech. businesses really was at its zenith during the Biden administration. So I don't think you. necessarily have to provide these regulatory.
dispensations .
dispensations .
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Speaker 1
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Speaker 1
I guess, then yes, I would agree. But I think it's not just about fintechs. It's also for the regulators to learn and and also down the line. And I know that it might be kind of a slightly bigger. investment in terms of putting together regulatory sandbox, but one, in theory at least could argue that the knowledge that, you know. regulators during the process of the sandbox, they pass on to the fintech firms, they reduce the cost of future. non-compliant firms. And this clarity would reduce the load of, of the work of, of agents within, within the regulator that would have to deal with that particular firm in the future.
So more clarity, more.
So more clarity, more.
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Speaker 1
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Speaker 1
Potentially be good. Now I don't have data can really assess whether regulatory sandboxes is are a good . investment . And, and also looking at different countries that have been funded through different means, for example, either industry or the European Development Bank or, or different kind of sources that not necessarily rely on the regulator. So it was a lot easier idea to pitch, I guess, but. I'll just revert back to in terms of, you know, what, what lessons can be learned from different countries. I think one could perhaps spin that around and highlight a few things that can be done to.
improve regulatory sandbox in the UK. And I made a short list here. And the one thing I think that we also touched upon before was transparency. So more. transparency would would be very beneficial. So we understand a bit more the reflections from the. regulators through the regulatory sandbox. So other things that do not participate at that moment in time can also benefit from more transparency in terms of the outcomes, how they benefit consumers. In the end, which is the ultimate aim, I guess, from any regulator. But also, you know, in that context against give access to more data and means and resources for independent evaluators, like academics like ourselves to be able to assess, you know, those, those aims, whether they have been met or not.
One thing that we alluded to through the discussion around AI would also be. potentially more targeted. sandboxes on a particular technology, or more thematic sandboxes on particular use cases that benefit the public, for instance. So that could be another way forward to improve the existing regulatory .
improve regulatory sandbox in the UK. And I made a short list here. And the one thing I think that we also touched upon before was transparency. So more. transparency would would be very beneficial. So we understand a bit more the reflections from the. regulators through the regulatory sandbox. So other things that do not participate at that moment in time can also benefit from more transparency in terms of the outcomes, how they benefit consumers. In the end, which is the ultimate aim, I guess, from any regulator. But also, you know, in that context against give access to more data and means and resources for independent evaluators, like academics like ourselves to be able to assess, you know, those, those aims, whether they have been met or not.
One thing that we alluded to through the discussion around AI would also be. potentially more targeted. sandboxes on a particular technology, or more thematic sandboxes on particular use cases that benefit the public, for instance. So that could be another way forward to improve the existing regulatory .
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Speaker 2
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Speaker 2
So to be clear, the FCA has always said that one of the goals of its sandbox is to promote financial inclusion by. creating more financial services products for traditionally excluded consumers. So there is definitely always been a consumer benefit. justification for the sandbox. But what we've seen and what we've been. discussing is that it's very hard to sort of quantify that, to see if that's really what's happening and what you end up with is something that very much appears to be benefiting the innovators, and then assumptions that that innovation will. I use the term trickle down.
innovation will .
innovation will .
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Speaker 2
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Speaker 2
Where you would naturally. expect the regulator to develop a relationship with the with the providers, as you said, like that. That's sort of what tends to happen. I think there's risks of what we call cognitive capture of identifying with the industry are much higher in a sandbox where you essentially have chosen a product as a. regulator that you want to see succeed. And so you become sort of a cheerleader for that product.
And that. ultimately is sort of how you measure the success. I don't know how you could make a .
And that. ultimately is sort of how you measure the success. I don't know how you could make a .
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Lord Vaux of Harrowden
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Lord Vaux of Harrowden
But yeah, thank you. Good walks. I should start by declaring an interest. I hold shares in Fidelity National Information Services Inc., which provides technology to financial. services companies around the world. I'm struck a little bit by a sort of contradiction in what I'm hearing here, in that I'm hearing that there is very little actual evidence about how effective sandboxes are in terms of innovation.
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Speaker 1
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Speaker 1
More consumer friendly products that benefit. customers and an overall, you know, they, they impose more competitive pressure on incumbent. organizations to then themselves be more competitive and user friendly. And I think we've seen that in the UK a lot through the fintech revolution that happened about or started about 15 years ago. I think you don't need to have academic evidence to look at your banking. application and see how it has evolved over the years. And, and I'd like to think that this is largely the pressure that a lot of the incumbent. organizations felt through innovative firms like Revolut and others who kind of flourished because of the UK fintech innovation ecosystem.
I think. Well, just to say that regulatory sandboxes haven't been successful everywhere, there is countries where regulatory sandboxes existing, and then they shut down because they couldn't really identify any concrete connection to to further investment in fintech or the flourishing of innovation. I mean, one of these countries happens to be in Greece originally come from. So they did a sandbox for a year. There was no resource supported. There was no evidence that it actually attributed to something in terms of the fintech innovation competition. Then they shut it down because the money ran out. And I'm sure if we look at the data, that will be kind of more countries that went through the the process.
I mean, regulators look at one another, they see one regulator kind of innovating. And FCA is at the forefront. They did that regulatory sandbox a few years ago and then others picked up on it. There's no doubt about that. That also happens in any kind of innovative firm. And so I think that's why we see the flourishing of sandboxes. But I think there is also benefit for the regulators themselves, not just the. organizations going through it. And and while we don't necessarily have a million papers assessing that and proving that, you know, using econometric models and then undisputed kind of results, I think in theory, one can line up a lot of arguments of why regulatory sandbox should exist.
So I wouldn't kind of shut it down completely. I wouldn't say that there is zero evidence we've actually done more bad than good. You know, the money of the FCA were, you know, the opportunity cost kind of dictates that they should be doing something else. We're not .
I think. Well, just to say that regulatory sandboxes haven't been successful everywhere, there is countries where regulatory sandboxes existing, and then they shut down because they couldn't really identify any concrete connection to to further investment in fintech or the flourishing of innovation. I mean, one of these countries happens to be in Greece originally come from. So they did a sandbox for a year. There was no resource supported. There was no evidence that it actually attributed to something in terms of the fintech innovation competition. Then they shut it down because the money ran out. And I'm sure if we look at the data, that will be kind of more countries that went through the the process.
I mean, regulators look at one another, they see one regulator kind of innovating. And FCA is at the forefront. They did that regulatory sandbox a few years ago and then others picked up on it. There's no doubt about that. That also happens in any kind of innovative firm. And so I think that's why we see the flourishing of sandboxes. But I think there is also benefit for the regulators themselves, not just the. organizations going through it. And and while we don't necessarily have a million papers assessing that and proving that, you know, using econometric models and then undisputed kind of results, I think in theory, one can line up a lot of arguments of why regulatory sandbox should exist.
So I wouldn't kind of shut it down completely. I wouldn't say that there is zero evidence we've actually done more bad than good. You know, the money of the FCA were, you know, the opportunity cost kind of dictates that they should be doing something else. We're not .
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Speaker 2
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Speaker 2
Far as arguing that. So I agree with a lot of that. I think, you know, Occam's razor, the simplest answer is often the correct one. And I think regulators were emulating each other in large part because this seemed like an easy win win. It was a way of signaling to the world that you were an innovative.
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Baroness Donaghy
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Baroness Donaghy
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Speaker 2
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Speaker 2
Desire not to seem stupid. And, you know, I think there isn't data. supporting the very widespread narratives about many fintech products and their benefits. Once you start interrogating a lot of these products, it really does fall apart, but it requires people to be willing to go out on a limb and question the conventional orthodoxy. Because the narratives, as you know, you alluded upfront to, to including people, the narratives about financial.
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Speaker 2
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Speaker 2
They have been spun so thickly that when you. challenge this kind of these kind of products, you're often accused. And I have been accused of wanting to cut off consumers from choice, wanting to cut off. consumers from the tools they need to build a better future for themselves. And so it's a very it's a very challenging position to be in, to try and say that the emperor has no clothes. And in that story, in fact, there's different versions of it. But if you go back to the Hans Christian Andersen, the. The courtiers never admitted that the Emperor had no clothes even once.
The child called it out because it was just too hard to admit that they'd been wrong for so long. So I think there's a lot of a lot of truth in that parable. I perhaps have gone very off topic, but I think, yeah, I don't think it's necessarily venal that the.
The child called it out because it was just too hard to admit that they'd been wrong for so long. So I think there's a lot of a lot of truth in that parable. I perhaps have gone very off topic, but I think, yeah, I don't think it's necessarily venal that the.
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Speaker 1
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Speaker 1
Yeah, I think perhaps my answer might be shorter than this, but I think there's a discussion to be made. I think the FCA will will have no reason to not supply further. information and evidence if they're asked to. And, and I think, you know, going back, I guess, to the overall discussion around innovation, particularly fintech.
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Speaker 1
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Speaker 1
No, I don't think anybody is saying that there is no innovation out there that does not. necessarily do anything for the public. I wouldn't go as far as saying that innovation in the end is bad. But of course, you know, in across many different industries, there is examples where what we think of as innovation did not have any positive effects to the public at all.
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Speaker 1
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Speaker 1
I mean, I was trying to figure out the example of social media, for instance, you know, which has been a multi-billion dollar industry right now. But I don't see the benefit of social media in terms of the. benefit that it brings to the public. Actually, it might be the other way around in so many hours, lost in in doomscrolling through, you know, social media that would reduce productivity. So that could be like an example that one can think about . FinTech, I don't see in a particular example is that could be so. damaging apart from, of course, kind of creating a new kind of monopoly and then skewing prices .
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Baroness Noakes
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Baroness Noakes
Data and more transparency if they asked. So. Excellent. So I'd like to thank both of you very much for coming to give us this first evidence session. I think you've set us up extremely well for the remaining stages of our inquiry, and it's been very thought provoking from many of your your comments this morning. So thank you both very .
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