We are living through a period of major political and economic uncertainty. While Brexit and new global forces reshape our economy, the rise of new technologies could set our financial system on the path to greater fairness, responsibility and democracy – or the reverse. Do we cling on to the status quo, with all its shortcomings? Or do we seize the opportunity to step back and ask ourselves what kind of financial system we want – and how we can regulate for that?
The Regulatory Compass: Towards a purpose-driven approach to financial regulation, funded by Barrow Cadbury Trust, draws on the experiences of the Finance Innovation Lab’s community of purpose-led innovators to argue that rather than being ‘purpose-neutral’, regulation is often designed around the large, shareholder-focussed firms that dominate the market. We explore how regulatory assumptions hinder financial firms focussed on social and environmental impact, and we identify three conceptual fallacies that limit the ability of regulators to embed social purpose in their approach.