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EU Fintech action plan EU Fintech action plan

The European Commission has published an Action Plan (PDF 538 KB) on how to harness the opportunities presented by technology-enabled innovation in financial services (fintech).

The ambition is that Europe should become a global hub for fintech, with EU businesses and investors able to make most of the advantages offered by the Single Market in this fast-moving sector. The Commission sees this as also relating to Capital Markets Union (CMU), a properly functioning single market for consumer financial services, and the creation of a Digital Single Market.

Within the Action Plan the Commission is proposing a Regulation on crowdfunding.

Action Plan

The Commission's Action Plan proposes 23 steps to enable innovative business models to scale up, support the uptake of new technologies, and to enhance cybersecurity and the integrity of the financial system. The steps include:

  • Inviting the European Supervisory Authorities to map current authorising and licensing approaches for innovative fintech business models; explore the need for guidelines on outsourcing to cloud service providers; map existing supervisory practices across financial sectors around ICT security and governance requirements, and where appropriate to consider issuing guidelines aimed at supervisory convergence and enforcement of ICT risk management (by Q1 2019); and evaluate the costs and benefits of developing a coherent cyber resilience testing framework for significant market participants and infrastructures (by Q4 2018);
  • Establishing an expert group to assess (by Q2 2019) whether there are unjustified regulatory obstacles to financial innovation in the financial services regulatory framework;
  • Supporting joint efforts by market players to develop standardised application programming interfaces, compliant with the PSD and the GDPR, as a basis for a European open banking eco-system (by mid-2019);
  • Monitoring developments in crypto-assets and Initial Coin Offerings, and assessing whether regulatory action is required at EU level;
  • Information sharing on cyber security;
  • Developing best practices on sandboxes (by Q1 2019);
  • Promoting the digitisation of information published by listed companies in Europe;
  • Hosting an EU fintech Laboratory where European and national authorities will engage with technology providers;
  • The Commission has already created an EU Blockchain Observatory and Forum. It will report on the challenges and opportunities of crypto assets later in 2018 and is working on a comprehensive strategy on distributed ledger technology.

The prospect of a wave of fintech related legislation looks large.


The Commission observes that existing national regimes for crowdfunding are often conflicting and hamper the development of a Single Market for crowdfunding services.

The Commission therefore proposes a Regulation on investment-based and lending-based crowdfunding service providers (ECSP). This will offer a European cross-border passporting regime for those market players who choose to apply to operate as an ECSP, under the supervision of the European Securities Markets Authority (ESMA).

The Regulation sets out requirements on ECSPs:

  • Adequate policies and procedures to ensure effective and prudent management, including the segregation of duties and business continuity;
  • Preventing conflicts of interest;
  • Safeguarding client assets;
  • Complaints handling; and
  • Outsourcing.

In addition, investor protection is reinforced through requirements on:

  • The information provided to clients;
  • An entry knowledge test (repeated every 2 years thereafter) and a simulation of the ability of a client to bear losses;
  • Risk warnings;
  • A prescribed key information document; and
  • Marketing communications.

Responsibility for authorisation, supervision and administrative sanctions will be given to ESMA, which will also have to prepare detailed rules and guidelines to flesh out the Regulation.

It will be interesting to see how many crowdfunding providers will want to subject themselves to the requirements proposed in the Regulation as a means of gaining greater scale through cross-border operations.

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