June 15th 2017 - The ACPR and the Banque de France responded to the Fintech consultation of the European Commission for a more competitive and innovative European financial sector.

This consultation aims to receive the opinions and propositions in order to better involve the Commission in terms of technological innovations in the financial services. The Commission is looking to identify the impact of new technologies on European financial services, as much from a financial services providers as from consumers’ point of view, and if the regulation and the supervision are suited for technological innovation in accordance with its three fundamental principles: technological neutrality, proportionality and integrity. Please find below the content of Banque de France’s and ACPR’s response, as well as a summary of its 10 main proposals.


  • Proposal 1: Ensure a harmonized and secure implementation of PSD2

Harmonizing national approaches to authorization of payment institutions (for example: there may be still discrepancies in the calculation of own funds requirements). Reconcile PSD2 (payment services) and EMD2 (e-money) directives to avoid varying interpretations about the scope of e-money.  


  • Proposal 2: Launch an overall reflection on the European regulation of multi-service financial intermediation platforms

We are witnessing the emergence of new platforms that want to combine several types of services: payment services from the 1st Directive on payment services (payment account management, provision of means of payment), services resulting from the 2nd Directive on payment services (aggregation, initiation), advisory services in financial investment, credit and insurance. This leads to the juxtaposition of national and European statutes for the same firm that can make the business more difficult to manage.


  • Proposal 3: Think about a common and harmonized European regulatory framework for alternative financing models

Since 2014, crowdfunding platforms benefits in France from a national regulatory framework. We propose, when the market is mature, to put in place a proportionate European approach for crowdlending and alternative financing platforms. This will require to take into account the evolution of business models (increasing share of institutional investors, declining funding by the crowd of individual investors).


  • Proposal 4: Develop EU convergence about peer-to-peer insurance

Since we observe differences in approach across European countries (on qualification as an insurance activity), we consider it may be worth working on a European approach for peer to peer insurance.  


  • Proposal 5: further analyze the merits of a sequencing approach in the license of new credit institutions

We suggest to further analyze the merits of a sequencing approach to authorization of new credit institutions, depending on the outcome of the European Commission’s consultation and the interest of market participants. For example, new banks with simple activities, could be granted with a limited or provisory license approval with a capped amount of deposits so as to allow the progressive development of the company.  


  • Proposal 6: Harmonize regulatory requirements for remote customer identification

The 4th Anti-Money Laundering Directive is minimal harmonization. As a result, regulatory requirements for remote on-boarding to identify customer may vary from country to country. To the extent that digital finance implies increasing remote relationships (Mobile applications, Web etc.), this is an important issue for all financial players.


  • Proposal 7: Apply future EBA recommendation on the use of cloud computing to all financial players

The EBA draft recommendations on the use of cloud computing only concern credit institutions and investment firms. We propose that the scope of these recommendations should be extended to all financial players, in particular those who manage and store sensitive financial and personal data, such as new payment players.


  • Proposal 8: Ensure a consistent implementation of the European regulation on the protection of personal data (GDPR)

We deem that a consistent application of the regulation on the protection of personal data to all actors interacting with European citizens is necessary. This also requires closer cooperation between the European supervisory authorities (ESAs) as well as between the ESAs and the G29 (the group of European data protection authorities) for its application in financial services. This would provide an opportunity to think about the need to set out principles on governance and oversight of algorithms used in financial services.


  • Proposal 9: Assess the need of setting up a sound regulatory regime for experimentation and testing in real conditions in the financial industry

We notice that the majority of Fintech project holders can find a suitable status within the current financial regulatory framework, even if the proportionality principle may be improved in some areas. But when the innovative project is likely to be disruptive and cannot fit with the existing regulatory framework (for instance DLT solutions), the EU could assess the need of setting up a sound regulatory regime for experimentation and testing in real conditions in the financial industry. Since the financial industry is essentially regulated at EU level, an EU initiative would be more legitimate and meaningful than the multiplication of national approaches.


  • Proposal 10: Defining an homogeneous taxonomy for cyber incidents

The sharing of information between public authorities is essential to improve the fight against cyber-risk. However they are currently different frameworks in place at national and international levels, which may lead to various and non-aligned exchanges. We are not pushing for additional exchanges platforms and are ready to contribute to enhance the homogenization of the different incident reports that are starting to be put in place (or about to be put in place) in order to favor consistency and reduce the burden for market players.

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The ACPR and the Banque responded to the Fintech consultation of the European Commission for a more competitive and innovative European financial sector.