UK lawmakers call for steps to preserve FinTech sector

The stakes were outlined in a report released by British FinTech entrepreneur Ron Kalifa, the former head of Worldpay

Lawmakers in the UK are calling for significant steps to preserve the country’s FinTech sector amid threats, including the lack of significant protections in the recent Brexit deal and the rise of special purpose acquisition companies (SPACs) in the US.

The stakes were outlined in a highly-anticipated report released Friday by British FinTech entrepreneur Ron Kalifa, the former head of Worldpay. Based in part on research by KPMG, the report stated that British FinTechs hold 10 percent of the global market share; British FinTechs took in more investment in 2020 than peers in the next five European companies combined; and 71 percent of U.K. citizens interact with at least one FinTech company’s services annually.

But three threats could undermine the sector’s dominance, the report stated.

One threat is that “competitor jurisdictions such as Singapore, Australia and Canada are investing heavily across many of the areas we have looked at, including capital, skills and direct support for FinTechs.”

Another threat, according to the report, is “Brexit has created regulatory uncertainty in specific areas relevant to FinTech. Firms must navigate the immigration system for European Union talent for the first time — whilst rival jurisdictions are rolling out aggressive attempts to lure talent in.”

Finally, the report stated: The pandemic has accelerated digital adoption globally in a way that marketing or policy never could. This is creating opportunities for jurisdictions that are quickest to diagnose what’s happening and nimblest to capitalize on the opportunities for FinTech.

The Kalifa report recommended the U.K. “ensure that FinTech forms an integral part of trade policy;” “create a new visa stream to enhance access to global talent for FinTech scaleups;” “expand R&D tax credits, Enterprise Investment Scheme and venture capital trusts;” and “accelerate the development and growth of FinTech clusters through further investment, such as in R&D.”

The report also called for changing rules so owners can list companies for trading while maintaining control.

Meanwhile, the Financial Times (FT) reported that another threat to the British FinTech sector is the growing use of SPACS in the U.S. which lets privately held companies go public with minimal headaches.

FT reported: Some of Britain’s most promising tech businesses are considering stock market listings in the U.S., amplifying the pressure on the U.K. to change listing rules at a time when ministers are keen to show an ambitious strategy for the City after Brexit.

According to FT, U.K. regulations are unfriendly toward the creation of SPACs.