US Comptroller of the Currency Tom Curry has told conference-goers at Chatham House in London that his regulatory organisation is not going to follow the example of other regulators and create a 'safe space' in which financial technology start-up businesses and pilot projects can bend the rules.

In looking at how financial IT companies can conduct pilots safely, the comptroller ruled out the 'sandbox' approach that the UK's Financial Conduct Authority, the Jersey Financial Services Commission and the Monetary Authority of Singapore are taking. These regulators are planning to waive some of their 'investor protection' rules for small start-ups and pilot projects with the aim of relieving them of the expense of having to comply with them from the very beginning.

Curry told the audience: "Some of the discussion about pilots is whether regulators should create a 'safe space; to allow companies to try out new products and processes without the risk of penalty if the trial runs afoul of consumer protection laws or other regulations. I do not support this approach. Waiving compliance with consumer protection or safety and soundness never makes sense, nor does our agency have the authority to waive compliance requirements. It is the company’s responsibility to ensure products and processes are safe before rolling them out."

Curry's prescription for start-ups and/or pilot schemes involved a battery of controls, monitoring and time limits. Added to this, he emphasised the importance of having a cup of tea with a regulator.

"Having an open dialogue with regulators in developing a pilot also helps by encouraging product and system designers to ask the right questions as they determine a product’s features and the parameters of the test. Working with regulators also helps regulators understand precautions that companies have taken to ensure new products and processes are safe and sound and meet consumer protection standards. Facilitating responsible pilots will be one of the many tasks of our innovation staff."

Fintech companies are now thinking of offering financial service to their customers alongside the usual financial institutions and the OCC has the authority to issue charters to companies that engage in at least one of three core banking functions — i.e. deposit-taking, the payment of cheques and lending. Many banks have innovation laboratories of their own and are investing in promising start-ups or collaborating with 'fintechs' already, and the comptroller appeared to favour their dominance of the fintech market as opposed to that of stand-alone fintech companies, perhaps because banks were already in the habit of complying with onerous regulations, or perhaps because of Wall Street's dominance of President Obama's cabinet.

The OCC is proposing to establish a central office dedicated to considering matters related to innovation affecting the federal banking system. The office will be the central point of contact and clearing house for requests and information related to innovation. It will hold office hours in cities with significant interest in financial innovation and will offer "candid regulatory advice." It will also 'lead' the OCC's collaboration on the subject with regulators all over the United States and indeed the world. Curry has appointed an "acting chief innovation officer" to spur the process on and everything should be ready by March.

The regulator, which has somehow survived the adverse publicity that surrounded its intimate involvement in the HSBC money-laundering saga, is still mulling over the question of whether to offer national bank charters to fintech companies.