Fintech laws protect consumers, investors

For innovation to thrive, data plays a major feature, a panellist tells AIF’s Business Ethics Conference 2018

By HABHAJAN SINGH

Finance technology (fintech) is sometimes romanticised as a den for innovators thoroughly engrossed in technology with little regard to regulations. They are seen to be wanting to zap from one point to the next in the shortest period possible. Is that really so?

The question popped up at a recent conference in Kuala Lumpur, attended by speakers from around the world, discussing fintech.

From a regulation standpoint, Securities Commission Malaysia (SC) gets into the fintech arena with a view that it is fairly technology-agnostic.

“It’s not about the technology itself. We look at the core mandate to safeguard and protect the consumers and investors,” SC ED for innovation Chin Wei Min told the conference.

“The industry is fairly new. They may actually go out of business, but we put regulations in place to make sure the issuers’ and investors’ legal obligations remain,” he added.

Chin spoke at the Business Ethics Conference 2018, entitled “Fintech: Business Benefits and Conduct Challenges”, organised by the Asian Institute of Finance (AIF).

He was one of the panellists at a plenary session entitled “Regulatory Framework and Ethics in the Age of Fintech”, moderated by AIA Group Ltd group president/CEO Ng Keng Hooi.

His fellow panellists were Amanie Group executive chairman Datuk Dr Mohd Daud Bakar, and Malaysia Venture Capital Management Bhd CEO Jamaludin Bujang.

Chin noted that the regulatory intensity of the fintech space increases as the size of the players increases.

Malaysia was the first Asean to introduce a regulatory framework to facilitate equity crowdfunding in 2015, with six registered equity crowdfunding (ECF) platform operators to fully operationalise by 2016.

The ECF platform provides an alternative venue for capital raising to small and medium enterprises and innovative new businesses, the SC had said in an earlier statement.

In September 2017, SC also announced that it had signed a series of innovation cooperation agreements — or “fintech bridges” — with several regulators in major financial centres, in a move to spur greater cooperation in facilitating and regulating innovations emerging within the digital finance industry.

It has established fintech bridges with the Securities and Futures Commission of Hong Kong, the Dubai Financial Services Authority and the Monetary Authority of Singapore. Earlier in June 2017, it signed the first such agreement with the Australian Securities and Investments Commission.

These fintech bridges will facilitate greater information sharing on emerging trends and regulatory developments. It will also facilitate referrals of innovative businesses seeking to operate in each other’s jurisdictions and the exploration of potential joint innovation projects. These efforts will help shape the regulatory approach and encourage the growth of digital finance within the country, SC said in a statement.

Touching on thriving innovation, Jamaludin said data plays a major feature.

For a start, he said the authorities should encourage the availability of data from certain sources to allow innovation of services. He cited Central Credit Reference Information System under the care of Bank Negara Malaysia and the data held by the Road Transport Department as examples.

“There has to be enough sources of information that all these companies can plug into. When these (raw) data are readily available, you can then come out with (new types of) services,” he said.

Two other plenary sessions at the one-day AIF conference discussed the benefits and challenges of fintech and the future ethical challenges in fintech.

The “Fintech: Benefits and Challenges” panel comprised CFA Institute Singapore co-head for ethics, standards and professional conduct Dr Tony Tan, Fintech Association of Malaysia founder president David Fong and Malayan Banking Bhd head of innovation for corporate development and innovation Amran Hassan.

The third plenary session, entitled “Future Ethical Challenges in Fintech”, saw panellists sharing perspectives on how adopting ethical standards and instilling a professional culture moving forward can create sustainable growth and value in the fintech industry.

The panellists were UK-based Accountancy Ethics consultant Elizabeth Higgs, Mohamed Ridza & Co managing partner Mohamed Ridza Abdullah and Financial Services Institute of Australasia head of standards and education for Australia Kylie Blundell.