What a new Labour Government means for the fintech industry
by Dan McLoughlin, Lynx Tech’s Fraud and Security Specialist
The new Labour government needs to focus on three key things: maintaining the UK finance industry’s global leadership; ensuring our regulations remain relevant domestically and globally; and fostering growth in our finance and fintech industries.
While we cannot say for certain what a new Labour government will deliver, its goals are broadly aligned with industry needs. We know it wants to keep the UK at the forefront of global innovation and prioritise the safe development of AI. Now in power, to deliver on these aims it needs to create its proposed Regulatory Innovations Office to speed up and maintain regulatory compliance and the implementation of new, pro-innovation Open Banking and Finance frameworks.
When it comes to AI however, there is a lot of talk but no coherent strategy. Many different topics and technologies are currently being bundled together under a single AI banner. There is a world of difference between Generative AI technologies such as Large Language Models (LLMs), deepfakes, and the kind of deep learning used to combat financial fraud. One size cannot fit all here, so policy clarification will be needed in the coming months.
In Labour’s manifesto, it offered no mention of interfering with existing or proposed regulations, so we can expect that the Payment Systems Regulator (PSR) regulations addressing Authorised Push payment Fraud (APPF), due in October, will still come into effect. This is critical, as this regulation is being followed closely by authorities worldwide. It could be a catalyst for the global convergence of fraud prevention and anti-money laundering, as well as highlight the scale of the problem of money mules, which are funding organised crime all over the world.
The industry will be watching the moves of Labour closely as it establishes itself in parliament, particularly its proposal for a more collaborative relationship with the EU. This could well lead to compliance with the EU’s Third Payment Services Directive (PSD3) being mandated in UK regulation. Either way, UK fintechs should ensure compliance with this regulation if they intend to operate within the EU.
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