Innovate Finance’s Unicorn Council for UK Fintech Publishes the Council Members’ Recommendations to Help Maintain and Strengthen the UK’s Leading Global Position in Fintech

The Unicorn Council for UK FinTech, launched by Innovate Finance, today publishes six core recommendations for policy-makers which are deemed critical to maintaining the UK’s leading global position in FinTech.

The Council met this morning ahead of the start of the 10th edition of the Innovate Finance Global Summit.

The key policy recommendations are:

Regulatory environment 

The UK regulatory environment for FinTechs has largely been built piecemeal over the last 10 years, reacting to new products as they emerge. This has created an unwieldy set of regulators and regulations which is holding back growth. The Council recommends a re-think of the regulatory approach to create a more joined up and efficient environment to foster innovation, growth and competition.

Business Asset Disposal Relief 

The tax benefit of this relief will not attract or incentivise the ambitious entrepreneur to the UK, or the successful founder to reinvest in a new venture. The Council recommends increasing and broadening the scope of this relief.

Capital markets 

There is a well-documented problem with capital supply in both the UK listed markets and private Growth Capital. Addressing these gaps is crucial for the growth of large FinTechs in the UK. The Council makes recommendations including the abolition of Stamp
Duty and the focused implementation of existing plans to address these capital gaps.

R&D

FinTechs are key innovators for UK consumer financial products and their research and development to develop these products is vital. Recent changes to the tax R&D schemes are expected to significantly reduce tax relief for FinTechs and as a result will reduce
R&D in the UK. The Council recommends that the scheme includes R&D by FinTechs explicitly within scope and provides an advance assurance facility.

EMI and EIS

The EMI and EIS schemes exclude start-ups in lending, banking or insurance and is a clear disadvantage in early stage capital raising. This anomaly should be corrected given the importance of attracting innovation to these sectors. Additionally, the EMI scheme has company-based  financial limits which are not appropriate for High Growth companies and are preventing larger FinTechs from competing for and retaining senior talent.

VAT

The VAT-exempt status of most FinTechs in effect means they have to raise 20% more capital than start-ups in other sectors. The Council recommends a VAT-rebate scheme for earlier stage FinTechs to level the playing field.

Janine Hirt, CEO Innovate Finance said: “We were delighted to host the inaugural meeting of the Unicorn Council for UK FinTech this morning and to publish the Council’s policy recommendations. Our members have identified the key issues to maintaining growth in UK FinTech and, importantly, they have made specific recommendations to the government on how best to address these barriers. We look forward to working with policymakers in the coming months to drive adoption of these recommendations and position the UK strongly for the next 10 years of FinTech growth and investment”.

Philip Belamant, Co-founder & CEO of Zilch said: “As a co-founder of the Unicorn Council (UCFT), we are very excited to Co-Chair this important and market first new initiative that brings together the most valuable late-stage private companies in the UK today. Akin to Zilch, the companies founded by my fellow CEOs have already delivered game changing economic value to the UK. Our sole purpose with the UCFT is crafting the go to policy playbook that outlines precisely what the government, regulators and the broader ecosystem need to address if our generation of fintech businesses are to continue thriving on a global stage”.

Francesca Carlesi, CEO Revolut UK, said: “We are delighted to be one of the Co-Chairs of the Unicorn Council for UK FinTech. Revolut was established only 8 years ago and is now a major UK-based international company with 40 million retail customers worldwide. It is important that the UK’s FinTech unicorns use their experience to make sure that the UK keeps attracting and growing the next generation of innovators”.

Charles McManus, CEO ClearBank, said: “ClearBank’s work with over 250 financial service providers from start-ups to industry leaders, has helped unlock their potential and bring about positive and meaningful change for UK businesses and consumers. We are determined to use the lessons we have learned in building our technology-led, innovative clearing bank, to ensure that the UK has the best business and regulatory environment for the sector, and so I am delighted to be Co-Chairing the Council.”