A few years back, most news stories about the sharing economy were novelty pieces explaining the wonders of a new and bizarre concept of opening your home to strangers or hailing a cab ride with a smartphone.
Today, it’s almost a constant fixture of the business pages. The industry has had to grow up fast and there’s no doubt it’s had growing pains. It’s rare a day passes without some article detailing how sharing economy firms are clashing with regulators about their business model.
So, what is the answer to the critical issue of industry regulation? Should the sharing economy self-regulate or should legislators wade in and takeover?
With great growth comes great responsibility
PwC has estimated the value of the sharing economy at $15bn, with that figure growing as high as $335bn by 2025. A quarter of the US, UK and Canada now take part in some form of economic sharing.
It’s easy to forget just how quickly all this has happened. Take a look at how popular the term ‘sharing economy’ has been on Google in recent years.
It’s only in the last two years that it has exploded. Indeed, over half of today’s sharing economy firms were founded in 2013 or later.
It’s little wonder then that the sector's potent mix of new employment models and constantly evolving technology has accelerated the need for legislation and policy change. As public and media scrutiny intensifies, there’s a risk the industry could be shackled for all the wrong reasons.
New kids on the block must begin showing maturity
Thanks - in no small part - to a light regulatory touch from the government, one in 12 global sharing economy firms are London-based - making the UK a global powerhouse.
But it’s inevitable, especially as lobbying intensifies from affected industries, that the light touch will give way to some form of firmer pressure. What we are seeing in the US right now with debates on the legal classifications of workers in the sharing economy will eventually cross the pond.
Similarly, there is a risk that public opinion could also turn. Just as large corporations are vilified now for creative tax payments, so sharing economy firms face a backlash movement against what some perceive as legal classifications of workers in the sharing economy.
Flying the kite for self-regulation
The debate shouldn’t be about whether we need self-regulation, but about how we self-regulate. By actively and constantly pushing up industry standards now, when further legislation arrives, it should only need to focus on clarification and guidelines, rather than wholesale changes and prohibitions.
It’s encouraging to see that Sharing Economy UK (SEUK), which Onfido is part of, is taking a lead in this area. The group is working with Oxford University and Sharing Economy expert Rachel Botsman to launch the world’s first sharing economy ‘kitemark’ symbol to recognise good practice in the industry.
At Onfido, we think this is an important move that will be good for everyone - from users to companies. Raising standards so that the sharing economy operates in the best and fairest way possible will not only make the industry a better one to work in; it will help ensure its continued success.
Legislators and lawmakers will react, so by showing maturity and embracing self-regulation we can make sure they have little to react to.
Come and tell us your thoughts
We’ll be discussing these issues at the Breakers to Makers: Sharing Economy and On Demand Conference this October. We’d like to get the thoughts of everyone involved in the sharing economy on this topic and help shape the agenda. So come join us and add your ideas.