Unintended Consequences: Financial Regulators Face Legal Impediments to Innovation
WASHINGTON, Jan. 23, 2020 /PRNewswire/ --The financial regulatory system is struggling to keep up with the breakneck speed of technological change, and even as financial regulators embrace new technologies, there are legal and regulatory hurdles that can hamper innovation.
Study Uncovers Legal Impediments that Hold Regulators Back
The Alliance for Innovative Regulation (AIR) and Flourish Ventures asked the Buckley law firm to prepare an analysis of these obstacles. AIR hosted a Congressional Briefing on Capitol Hill on Thursday, January 23, 2020 to share a brief overview of findings and recommendations.
The report, based on off-the-record interviews with a broad range of current and past agency officials, is Financial Regulators' Dilemma: Administrative and Regulatory Hurdles to Innovation available here: https://www.regulationinnovation.org/report. These conversations spot-lighted at least nine laws or government protocols, including the Freedom of Information Act, the Antideficiency Act, the Paperwork Reduction Act, and procurement rules that create stumbling blocks to regulators' efforts to learn about and deploy new technology.
"These laws were all put into place for good reasons, including transparency in government. However, they all originated before the digital age and in certain cases they have created unintended consequences that significantly limit our regulators' efforts at innovation," says Jo Ann Barefoot, CEO and Cofounder of AIR.
In one example, a regulator described being unable to invite an academic to speak at the agency, as it could be interpreted as a gift. In another example, regulators are limited in their ability to meet with and learn from market innovators because of the requirements relating to advisory councils. Many agencies also face difficulty in pilot-testing new regulatory technology.
"Most fintech innovation is taking place in the private market. As momentum builds for the digital modernization of the regulatory system, regulators must be able to learn from the experience of market participants," says David Ehrich, Executive Director of AIR. "Helping regulators decrease the cycle time of innovation needs to be a top priority."
AIR's mission is to help modernize the financial regulatory system with new technology. This will streamline costs, expand financial inclusion, curtail financial crime, and strengthen financial stability. www.RegulationInnovation.org.
SOURCE AIR - Alliance for Innovative Regulation
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