Responsible Finance Forum

Regulating for Innovation

Nichola Beyers, Jeremy Gray and Christine Hougaard
01 January 2018
Source:  Cenfri

Why regulate for innovation? Innovation entails the introduction of new methods, ideas or products that offer greater efficiency or value in existing processes or products or that entirely redesign the existing ways of doing business or offering products. New technologies mean that innovation in the financial sector is happening at a faster and more prevalent rate than ever before. Innovation is fundamental to market development and enhancing value to consumers. However, it brings with it consumer and systemic risks and, due to its novel nature, is often not fully accommodated in current regulatory frameworks. Indeed, innovation may challenge the very nature of insurance and other financial services. This confronts regulators with the need to facilitate and promote innovation, while protecting consumers and adequately managing the risks that arise.