Press release 15/2018

3 october 2018

 

The AdC has approved the final version of the Issues Paper “Technological Innovation and Competition in the Financial Sector in Portugal”, following the public consultation process of the paper’s draft version, published in April 2018.

The AdC received responses from 11 entities, including regulators (the Bank of Portugal and the Portuguese Securities Market Commission – CMVM), associations (Portuguese FinTech and InsurTech Association – AFIP, Portuguese Banking Association – APB, Associação Portuguesa de Empresas de Distribuição – APED, and the Portuguese Consumer Protection Association – DECO), market players (Easypay, Mastercard, Mutuall and SIBS), and a law firm (LSM Advogados).

 

The AdC welcomes the public discussion and the market developments that occurred in the meantime that are in line with the Issues Papers’ recommendations, such as the launching of the “Portugal FinLab” innovation hub.

In the Issues Paper’s preliminary version, the AdC identified barriers to entry and expansion that FinTech companies might face in the provision of payment services and crowdfunding. Those barriers are mostly related to the regulatory framework and the market foreclosure risk by incumbent banks.

 

The AdC analyzed the responses and weighed them in in the drafting of the Issues Paper’s final version. The public consultation allowed the AdC to ratify many of the conclusions of its earlier analysis. As a result, the AdC has kept its recommendations aimed at promoting innovation and competition in the financial sector to a considerable extent. The specific details of these recommendations benefited from the many responses received by the AdC.

 

The AdC reiterates the need of keeping up with the challenges posed by innovation through an adequate and proportional regulatory framework. In the payment service sector, specifically, PSD2’s transposition to national legal framework should be followed by an effective implementation process, which allows the benefits of innovation and competition in the sector to materialize.
Indeed, the risks identified by the AdC are not completely dispelled by PSD2’s transposition. Risks will remain in what concerns the implementation of the Directive and the regulatory technical standards.

 
One of the most relevant issues relates to account information access by new market players. In this respect, the AdC considers that, in line with the spirit and goals of PSD2, it is crucial that this access is not subject to charges.

In the crowdfunding sector, the public consultation process provided reassurance of the importance of granting FinTech operators full access to the Central Credit Register. This access would contribute to mitigate lending crowdfunding platforms’ disadvantages vis-à-vis the remaining credit-granting institutions.

Additionally, many stakeholders confirmed that crowdfunding investment limits constitute a barrier to expansion in the market. The AdC thus reiterates its recommendation that the necessity and proportionality of these limits should be evaluated, in light of the underlying public policy goals.

 

For a summary of the main conclusions and recommendations that resulted from the AdC’s analysis, see the two-page summary that is published together with the Issues Paper. (In Portuguese only)