The FCA has said that it is concerned about the pace of innovation – quite a departure from the stance of Project Innovate (as noted here), saying: “While the FCA has placed great weight on promoting innovation in financial services in general, we are growing increasingly concerned about the speed of change in the investment-based and loan-based sectors [of crowdfunding].”
As both Bank of England governor Mark Carney and chief economist Andy Haldane have both pointed out, yet again, in the last week or so systematic financial exclusion and inequality “is right up there among the most important issues that we face today”. These are the most pressing divisive and toxic problems for us all – the fact that more than half of the country is being “left behind” by those “who have”, and have access to power, serving their own interest and enrichment, and devil-take-the-hindmost.
Carney warned not so much (as the BBC reported) about the “disillusioned poor”, as the de-stabilising effect, and inevitable results if this is allowed to continue. He said: “Turning our backs on open markets would be a tragedy, but it is a possibility. It can only be averted by confronting the underlying reasons for this risk upfront.”
From this perspective, seeking to slow down financial innovation, and neutering the one source with real potential for change, seems a kind of madness – or at least a huge and unnecessary risk.
Fintech, including and especially crowdfunding, but in all its forms, has been our best hope of wresting enough of the power away from the incumbent banks and corporates to be able to start to rebalance
It’s about opening the doors to everyone and starting to make some changes to the machine which systematically funnels wealth down a one-way street, inside the M25. This systematically increases inequality and poverty elsewhere.
At the start of 2016, Sheriff of Dodge (“shoot first, ask questions later”) Martin Wheatley was replaced as head of the FCA by banker’s banker Andrew Bailey – who’s name used to appear on all our banknotes.
Apart from a little sabre rattling here and there, no doubt to test the waters, he’s been remarkably quiet – letting some of his circle, notably Adair Turner, do the talking for him. Sofly softly catchee monkey?
So it now seems that the fox in charge of the hen-house, and our future, and has been cunningly awaiting his moment. Just before the Christmas break provides a choice of “good days to bury bad news” of course.
Bailey, although made to help clear up the mess he helped create as one of the architects of the global crash of 2008/9 and the mess we’re still in, is it seems an unreformed, banker’s banker. He seems to wants to roll back the revolution, before it can bite and become a threat to the established order. His “boiling the frog” language is, as one would expect, carefully chosen, but the intent is clear.
The FCA’s “consultations” are also widely known and well understood to be “arse-covering” exercises – a game to allow them to do whatever it is they want. So, as usual, the real consultation, if any, starts (and probably ends) here with this announcement – floating a reversal, a turning back of the clock. This snuffs out any hope of a new start.
This then creates insurmountable new barriers to entrants and forces onto others burdens that in time will inevitably prove impossible to bear, at which point they will be swallowed up by those same behemoths.
So will our future, and the future of the fintech revolution – promising as it did a brighter future based on new innovations loosening the stranglehold of the behemoths. Will the revolution be decided by the fox now in charge of the chicken coop? Or will there be a real consultation – and will the people that this is supposed to be about, and who pay the FCA’s wages, the people, the crowd, call us mere “consumers” if you must, those who in a saner and better world might get to decide, even get a say? Or is this a party for bankers only?
It’s time the crowd had a voice in this – and I don’t mean the FCA’s toothless “Consumer Panel” who, as far as I know, have yet to even try to bite the hand that feeds it, and who have failed to engage on this despite repeated invitations.
What’s certain is that the bankers, and no doubt their banker, are comfortable with the status quo. Bailey has shown no inclination, let alone any enthusiasm, for change or innovation. They’d prefer that this revolution to go away, as quietly as possible – and are prepared to play a long-game to that end.
It must not be allowed to happen, lest the pain now being suffered from the divisions created by and driving the voter’s revolts on both sides of the Atlantic become more acute and, as Mark Carney has said, precipitate an eruption that none of us want and from which we may all lose far too much.
Former business secretary Vince took on the banks after the crash, doing all that was humanly (and governmentally) possible to bring change and was rebuffed by the banks. Government can’t do it. Fintech could – which is why the banks would turn aside this revolution.
Theresa May promised to work to create an economy that works for us all – the just-about-managing, as well as the left-behinds. So this will be a key test of just how serious she and this government are about this.
Whether the banks, bankers and establishment can quietly snuff out this revolution, or whether it can go on to become a real engine of change, is currently in the hands of one of its own. If ever there was a moment for scrutiny and democratic accountability this is it. And it’s time for Theresa May to be looking at whether the bankers banker is the right man for this job – and be in charge of Project Innovate (but not too much).