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16-088MR British and Australian financial regulators sign agreement to support innovative businesses
Under a new world-first agreement, innovative fintech companies in Australia and the United Kingdom will have more support from financial regulators as they attempt to enter the others’ market.
As a result of the agreement signed today, the UK’s Financial Conduct Authority (FCA) and the Australian Securities and Investments Commission (ASIC) will refer to one another those innovative businesses seeking to enter the others’ market. The regulators will provide support to innovative businesses before, during and after authorisation to help reduce regulatory uncertainty and time to market.
The agreement follows the creation of Innovation Hubs at the FCA and ASIC in October 2014 and April 2015, respectively. The Hubs were set up to help businesses with innovative ideas navigate financial regulation, support them through the authorisation process and engage with the regulator. To date the FCA’s Innovation Hub has supported over 200 businesses and the authorisation of 18 businesses. Likewise, ASIC has dealt with over 75 innovative start-ups including the granting of 10 licences.
Christopher Woolard, director of strategy and competition at the FCA, said:
'Innovation in financial services isn’t limited by national borders and so it’s important that we support overseas businesses that have new ideas that could benefit British consumers. We also know that many British firms wish to use the UK as a springboard to launch their businesses or products internationally, making them potentially more sustainable challengers. That is why this agreement – the first of many, we hope – is important. With ASIC, we will reduce the barriers for authorised firms looking to grow to scale overseas and to assist non-UK innovators interested in entering the market we oversee.'
Greg Medcraft, chairman, Australian Securities and Investments Commission, said:
'ASIC is committed to encouraging innovation that has the potential to benefit financial consumers and investors. Since ASIC launched its Innovation Hub last year we have seen a surge in requests by fintech startups seeking assistance about how to navigate the regulatory requirements. In particular we have dealt with robo or digital advice, crowd sourced equity funding, payments, marketplace lending and blockchain business models. It is very exciting to observe and clearly some business ideas will want to scale up internationally. We believe this agreement with the FCA will help break down barriers to entry both here and in the UK.'
To qualify for the support offered by the agreement, innovator businesses will need to meet the eligibility criteria of their home regulator’s Innovation Hub. Once referred by the regulator, and ahead of applying for authorisation to operate in the new market, the business will have access to a dedicated team or contact person who will help them to understand the regulatory framework in the market they wish to join, and how it applies to them. These businesses will be given help during the authorisation processes with access to expert staff and, where appropriate, the implementation of a specialised authorisation process. Following authorisation, the businesses will have a dedicated contact to turn to for a year.
ASIC and the FCA have also committed to share information on emerging market trends and their impact on regulation.
The fintech industries in the UK and Australia are estimated to have revenues of around $12.5bn ( £6.6bn) and $1.3bn (£0.7bn) a year, with both growing rapidly.
- Co-operation agreement: Financial Conduct Authority and the Australian Securities and Investment Commission
- EY report, commissioned by the UK’s HM Treasury: UK FinTech: An Evaluation of the International FinTech Sector
- FCA Innovation Hub
- ASIC Innovation Hub