Innovate Finance used a report to put six asks in front of the Burnham government, six weeks out from the Budget. The trade body got the agreement it wanted on the diagnosis. On three of the six asks, the firms it speaks for say the mechanism it has chosen will not work.
Its report, FinTech as a Force for Good, published in September, is best read as what it is: a Budget submission filed six weeks and one day before the Chancellor stands up, written deliberately in the government’s own vocabulary of good growth and every postcode.
“Innovate Finance is right that responsibility for fraud should extend beyond the payments industry,” says Jonathan Frost, Director of Global Advisory for EMEA at BioCatch. “A fund may decide who pays after a scam, but it doesn’t answer who must act to stop one.”
What Innovate Finance is asking for
Six asks. Accelerate Open Finance, with a regulatory framework by the end of this year, because the FCA’s roadmap is “too slow” and the Treasury’s commitment to consult in 2027 is “too late”. Pull social media and telecoms companies into the mandatory reimbursement regime through an Ofcom-designated fraud origination redress fund. Build a national sterling stablecoin strategy. Build a reusable digital verification market that does not, in the report’s words, “unintentionally entrench a single provider, platform or wallet”. Rebuild EU market access for firms that now need two licences. And reform EMI, CSOP and Business Asset Disposal Relief, and abolish stamp duty on UK shares.
The numbers carrying the argument, as the report states them: 66 per cent of authorised payment frauds in 2025 originated on online platforms, with APP fraud up 19 per cent to £576.4m and 89 per cent of it reimbursed by banks and payment firms; 99 per cent of stablecoins in circulation denominated in dollars; and £300bn of household cash sitting in low-interest accounts. The 68 per cent of purchase fraud reports originating on Meta platforms is Lloyds Bank analysis the report cites rather than produces.
Where the sector agrees
On platform liability the principle is not in dispute. “If 66 per cent of APP fraud cases originate online while payment firms carry the responsibility for reimbursing victims, the incentives are clearly misaligned,” says Scott Dawson, CEO of DECTA UK, who calls pulling platforms and telecoms companies in “smart and proportionate, and I support it, but here is the problem”.
The timetable criticism lands too. “Innovate Finance is absolutely right to challenge the Open Finance timetable,” says Akber Datoo, CEO of D2 Legal Technology, and Dawson attaches the dates: “The Open Finance roadmap doesn’t reach scaling until 2028-2030 but that’s a long time in fintech and the industry is ready to go today.” So does the cross-border prize, which Ciaran O’Malley, Director of Commercial Enterprise at Airwallex UK, calls the measure of “the scale of the opportunity”: the report’s finding that a 3 per cent improvement in cross-border payment efficiency could unlock £56bn for UK businesses.
Where it does not
Fraud draws the sharpest response, from two directions.
Frost’s objection is that the report has designed a settlement mechanism and called it prevention. “Banks, tech platforms and telecom networks each see different parts of the fraud journey, and criminals exploit the gaps between them. Neither the Fraud Strategy nor the Online Crime Centre have a clear requirement to share intelligence and act on it within a set timeframe.” His alternative is statutory, and it is not a fund. “Australia’s obligations for all three sectors to prevent, detect, disrupt and report fraud provides the kind of accountability that changes behaviour. If we are serious about prevention, the UK needs a legal duty to share intelligence and act in real time. Success should be measured by how many people avoid becoming victims, not by how efficiently the cost of failure is divided afterwards.”
Dawson’s problem is the one the report does not solve. “An Ofcom redress pot only works if contributions are closely linked to the fraud individual platforms enable and fall when prevention improves, otherwise it risks becoming another cost of doing business.”
On sterling stablecoins, the criticism is that Innovate Finance aimed at the Treasury and left the Bank of England alone. “Innovate Finance highlights digital dollarisation but avoids challenging the BoE’s regulatory direction,” says Can Taner, Chief Product Officer at Bitpace. “While allowing 70 per cent of backing assets in short-term gilts is a step forward, forcing systemic issuers into a 30 per cent unremunerated central bank deposit requirement severely penalises non-bank issuers, making sterling stablecoins uncompetitive alongside tokenised bank deposits.”
Both figures are the Bank’s own, from its June policy statement on sterling-denominated systemic stablecoins, which moved the split from 60:40 to 70:30. The Bank pays nothing on the deposit portion because, on its reasoning, stablecoins are payment instruments rather than a store of value and so sit outside monetary policy transmission.
Taner gives a single rule for where his company builds, and a consequence. “Bitpace decides where to build based on a single rule: local merchant volume demand. Because UK regulatory friction suppresses native liquidity, USD stablecoins account for over 95 per cent of the global stablecoin market cap.” His conclusion is addressed to the trade body, not the government: “Innovate Finance must challenge this restrictive UK framework head-on. Otherwise, sterling will remain irrelevant in modern cross-border financial infrastructure.”
Datoo’s agreement on the Open Finance timetable comes with a harder point about who is holding things up. “Bringing forward a consultation will not make financial institutions’ data usable,” he says. “Faster access to poorly considered data risks automating the wrong decision more efficiently.” He then turns the ask around: “I would challenge bank boards as well as ministers: who owns the job of turning those rights and obligations into reliable, machine-readable data? Blaming regulators is easier than funding that work. Some of the real obstacles are skeletons in banks’ own cupboards: fragmented records, unclear ownership and poorly understood legal exposures.”
Dawson’s own condition is the opposite of a deregulatory one. Open Finance, he says, “needs the same urgency and seriousness that Open Banking had”, not weaker consumer protection “in the hope that it’ll speed up growth (it rarely does)”.
The report’s most quotable line, that “establishing a company in a city like Berlin now provides access to more customers than setting up in London”, gets qualified from both sides. Dawson accepts the opportunity and prices it: “in practice you’ll have to duplicate governance, compliance, capital and operational overheads before you acquire a single new customer.” London remains an exceptional fintech centre, he says, “but we need to be candid that regulatory friction will impact investment decisions”. O’Malley thinks the comparison is dating: “In the AI era, businesses are increasingly global from the outset.”
The gap between the ask and the Budget
Sorting the six by what 28 October can carry is unflattering to the urgency. Four are Budget-shaped: EMI thresholds, the CSOP limits, the Business Asset Disposal Relief change the report says cut the maximum saving from £1m to £60,000, and abolishing stamp duty on shares. A Chancellor can do those in a speech, though FGS Global’s read, published in Innovate Finance’s own policy newsletter on 1 September, is that fintech-specific measures are unlikely to feature while EMI changes are possible.
The fraud ask cannot be done that way. It needs amendments to the Online Safety Act 2023 and the Financial Services and Markets Act, a designation process at Ofcom and a distribution mechanism that does not exist yet, so the realistic vehicle is the Financial Services and Markets Bill after the Budget and the realistic date is 2027. Open Finance is a regulatory timetable rather than a fiscal one, and the stablecoin and verification asks are accounting standards, legal basis and procurement decisions spread across the FRC, the Bank, the FCA and the Office for Digital Identity and Attributes.
So the report is two documents: a Budget submission with four tax measures in it, and a two-year regulatory programme presented with the urgency of something deliverable in six weeks. The contributors have spotted the difference, which is why they argue about mechanisms rather than goals.
Innovate Finance’s response
Innovate Finance was given the criticism in full and answered it. Adam Jackson, Chief Strategy Officer, engages with all three challenges and concedes the underlying point about pace: “whilst we have all the fundamentals that make the UK the leading global FinTech hub, we live in a rapidly changing, ever more competitive world and we therefore constantly need more pace and ambition.”
On fraud he accepts the premise and says the mechanism is the answer to it. “We agree with Jonathan Frost and Scott Dawson that reimbursement is not an end in itself; rather, it should incentivise prevention. The priority must be to spot and stop fraud.” Extending reimbursement to platforms and telecoms is, on his account, exactly that incentive: “Firms only pay reimbursement for frauds that have used their systems.” It would, he says, “target those platforms” with the highest incidence of fraud, naming Meta among them, and payments into it “should decline as prevention improves”. That last clause answers Dawson’s condition directly. On Frost’s demand for a legal duty to share intelligence in real time, Jackson says Innovate Finance agrees, developed a blueprint with its members and that the Home Office is now taking it forward through the Online Crime Centre, which the Fraud Strategy 2026 to 2029 funds with £31m. Worth noting that the strategy describes the centre as rapidly analysing data and coordinating action rather than as the cross-sector real-time duty Frost is asking for.
On stablecoins he rejects the charge outright: “On stablecoins we have done exactly what Can Taner calls for us to do: challenging the Bank of England’s approach.” On the record, he is right, and this paper is where he did it. When the Bank published its framework in June, Janine Hirt, Innovate Finance’s CEO, told The Fintech Times that “despite some positive changes in response to industry feedback, the Bank of England’s approach still risks creating the most conservative and cautious stablecoin regime in the world”, that the deposit requirement “removes a third of the potential revenue for service providers and issuers”, and that the Bank is “the only country in the world that requires a significant proportion of assets to be held in deposits that earn no return”. She also warned of “a significantly increased risk of dollarisation of the economy”. That is Taner’s argument, made by the trade body he says avoided making it, three months before he made it. Where Taner is on firmer ground is the report itself: Jackson confirms it was aimed at government rather than regulators, which is why it asks for accounting standards and a legal definition of collateral instead of taking the Bank on again. He also points to the government’s August decision to give the Bank a new secondary objective on payments and digital money innovation, which he says Innovate Finance had called for.
On Open Finance he concedes Datoo’s point about where the blockage sits. There has, he says, “historically been some reluctance by incumbents to embrace it; and a tendency to view it as compliance rather than commercial product value opportunity”, though he argues that is changing as open banking becomes the enabler for agentic AI, and that the report targets government because joining up Open Finance and AI policy, and the secondary legislation behind it, is a ministerial job.
Disclosure: The Fintech Times publishes a monthly column under the byline of Janine Hirt, CEO of Innovate Finance.
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