On 13 December 2019 the Expert Group on Regulatory Obstacles to Financial Innovation (ROFIEG), set up by the European Commission in June 2018, published its recommendations on how to create an accommodative framework for technology-enabled provision of financial services (‘FinTech’).

The group's 30 recommendations are pertaining to the innovative use of technology in finance, maintaining a level playing field, access to data, and the financial inclusion and ethical use of data.

In particular, the recommendations can be grouped into four categories:

– First, the need to adapt regulation to respond to new and changed risks caused by the use of innovative technologies, such as AI and DLT, and take up any emerging opportunities with respect to RegTech or SupTech (Recommendations 1-12);

– Second, the need to remove regulatory fragmentation and ensure a level playing field between incumbents and new market entrants, both FinTech start-ups and BigTech firms, across the entire EU (Recommendations 13-24);

– Third, the necessity to reconcile the regulation of personal and non-personal data with the opportunities and risks offered by FinTech (Recommendation 25-28);

– Fourth, the need to consider the potential impacts of FinTech from the perspective of financial inclusion and the ethical use of data (Recommendations 1 and 29-30).

According to ROFIEG, the top Recommendations in terms of regulatory reform, highlighting the need to address as a matter of priority, are the following:

– The explainability and interpretability of technology, especially AI, as measures to protect consumers and businesses and facilitate supervision, or to meet supervisory expectations (Recommendation 1);

– The creation of a regulatory framework built on the principle that activities that create the same risks should be governed by the same rules, with a view to ensuring adequate regulation and supervision and maintaining a level playing field (Recommendation 13);

– The ending of regulatory fragmentation, especially in the area of customer due diligence (CDD)/know your customer (KYC), as an important step towards creating a level playing field (Recommendations 15-17);

– Preventing unfair treatment of competing downstream services by large, vertically integrated platforms, in order to strengthen innovation and maintain consumer choices (Recommendation 22);

– The strengthening of the framework for access to, processing and sharing of data, in order to promote innovation and competition and establish a level playing field amongst actors (Recommendations 27 and 28).

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