We are passed the mid-point of the Disruptive Finance Policy project now and some clear themes are beginning to come through the work. The mapping exercise of the most promising policy ideas that could disrupt the finance system in a way to promote a sustainable economy has demonstrated the breadth of thinking that is going on in this area. Not only that, but when you take an overview, you can see what policy interventions could potentially complement each other. With a combination of disruptive policies from top down, bottom up and working with the mainstream then transformation of the finance system to something more sustainable is possible. You can view our mapping work via this link to our prezi presentation. With over 1500 views, now, we hope that our framework is helping others get to grips with this complex subject.
The mapping formed the background to the workshop we held in March which helped to sift through the policy areas most worth pursuing. There was much interest in the idea of tax incentives for responsible investment, and Green Alliance have since published a report, Saving for a Sustainable Future, which sets out the arguments and options. Other ideas which had a great deal of support at the event were to find ways of encouraging the growth of local banks in the UK. The think tank Civitas has since published a report, Street Cred, which makes a number of far reaching recommendations for government and regulators. The Finance Lab will also be supporting amendments to the Financial Services Bill, aimed at strengthening the duties of the new Financial Conduct Authority (FCA) to promote new entrants to the banking market.
Another set of new entrants to the savings and loans market, that could help loosen the grip that the ‘too big to fail’ banks have on the system, is the peer to peer movement. Once again it is clear that there are regulatory barriers to such companies being set up. Many take over two years to get through regulatory system, which is designed to protect consumers from the risks posed by large, universal banks, not the far simpler services that peer to peer platforms provide. This fledgling industry, delivering financial innovation that is socially useful, is actually asking the government for proportionate regulation. So far government have said no, and this refusal to acknowledge the sector formally risks stunting its growth, although Zopa, Funding Circle and other established P2P platforms do continue to thrive. As with local banking, there are amendments that could be made to the Financial Services Bill that would create a more enabling regulatory environment for such innovations. In the next few months, The Finance Lab will be working with Simon Deane Johns and other in the P2P sector to raise awareness of the issues with policymakers, and advocate amendments to the Bill.
We are also discussing the findings of the project with think tanks from all political persuasion and hope to announce some joint activities in the near future.