that ComplianceSOS® is now a registered UK and EU trademark and brand. This forms part of the Met Consult suite of services for clients who need help to:

• understand, plan for and solve their compliance and risk related issues
• direct FCA authorisations
• review financial promotions
• mediate disputes or complaints
• place non-executive directors
• place emergency compliance officers
• s.166 advisory

For more information click here

You may also be interested  in the following articles:

   Unbundling MiFID II – Street Consulting

   Fintech Finance – Bhavesh Kotecha

   Rise of Fintech

   Finance Monthly (M&A) Awards 2017

   HFM Awards 2016

ID REF: 18 OCT 17 0002

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Lifting The Weight Of Regulation

Regulation. It is akin to the gym memberships we all have – big direct debits going out each month but seldom used let alone appreciated. Until the day you decide to use a personal trainer. You then get a better sense of how it all works and the value it brings. Similarly, regulation doesn’t have to be payment going out for something you do not understand nor does it have to be a hard workout. It can be a simple, cost-effective and an easy to grasp operation.

In recent months I have deliberated with many players in the fintech space, at events such as Fintech Connect Live, at drop-ins hosted by Canary Wharf-based accelerator Level 39 and recently the FCA’s Sandbox roundtable. We discussed the growing cost of regulation and ever increasing compliance obligations.

From the discussions, a couple of common themes emerged, with many asking:

Does my innovative business model or service need to be regulated?

If so, how can I do this cost-effectively, painlessly and swiftly?

The first question is usually a yes. A key principal for FCA is treating customers fairly and protecting consumers from harm so inevitably your business will need some form of supervision. Project Innovate, the campaign to encourage innovation in this sector, shows that understanding the level of supervision and applying the relevant regulatory permissions does not need to be tricky or time-consuming.

Regulatory permissions can be divided into relevant activities for your business, such as advising, arranging, and dealing or managing investments.

Bhavesh Kotecha, Managing Partner at Met Facilities, says it is not always about having “an out with the old, in with the new” mindset but is more about understanding the underlying core business activity and aligning it to the current regulations.

A new fintech business – be it a payment solution, lending platform or digital currency innovation – can often be matched with the current regulatory architecture.

“Even if the new product or service is innovative, the regulatory solution does not have to be,” Bhavesh added.

To the second point – can regulation be done cost-effectively, painlessly and swiftly – the gym is a much easier place to navigate now my personal trainer has shown me how to get value from it.

Similarly regulatory platforms can ease the burden and help you become FCA compliant in a matter of weeks, allowing you get on with the job in hand.

The traditional lengthy, resource heavy and often costly direct FCA authorisation route is usually not an option for start-ups or small firms so the regulators and service providers have responded. A viable and popular alternative that is growing in demand is to use a regulatory hosting platform, also known as a regulatory umbrella, such as Met Facilities.

Becoming an Appointed Representative of a principal firm (the platform provider) provides your business with all the relevant regulatory permissions to conduct your business activity while the principal bears the compliance risk, regulatory filing and reporting and supervisory burdens.

Outsourcing this is a quick, easy and cost effective solution. Fixed costs become variable and permissions are set up in a matter of weeks. Best of all, you don’t need to become a regulatory expert or devote any manpower to navigate the complex regulatory landscape. Firms such as Met Facilities can do the full registration, training and can deal with the ever increasing compliance obligations – which includes regulatory filings, maintaining a risk management infrastructure and dealing with tax and payroll issues – allowing you to focus on building your business.

Former financial services reporter at the FT, Jonny Paul, says: “There has been a proliferation of regulatory platform providers in this space but only few, like Met Facilities, offer the regulatory permissions while providing a comprehensive and robust infrastructure for growth and long-term partnership.”

Regulatory umbrellas work closely with the FCA and are at the forefront of regulation and risk monitoring.

“Understanding how the innovative fintech space interfaces with traditional models is crucial to providing compliant and commercially suitable solutions,” Bhavesh said. “And it’s not just about being compliant, there is a certain prestige and halo-effect. Investors and prospective clients will realise you are running a tight ship with robust procedures, processes and controls in place.”

So there is no need to throw the old bathwater out, the current regulatory architecture is already well structured and applicable. However it is complex and continually evolving and experienced regulatory hosting platform providers, such as Met Facilities, can provide that service and help your business become compliant and up to date with all the regulatory changes, allowing you to have the peace of mind enabling you to make regular visits to the gym and really get value for your money.

Contributors included Johnny Paul, an independent financial services journalist. Follow him @StrummerJonny.

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Firstly, what is a regulatory sandbox?

Traditionally, the sandboxing refers to the testing of unverified programs that may contain a virus or other malicious code, without allowing the software to harm the host device.

A ‘regulatory sandbox’ allows businesses to test out new, innovative financial products, services or business models without incurring all the normal regulatory consequences.

In essence, firms will be able to use tailored authorisation to test their products and services.

The FCA says that a sandbox could provide more opportunities for innovators. It could provide better outcomes for consumers and allow the FCA to work with innovators to ensure that appropriate consumer protection safeguards are built in to their new products and services.

What are the benefits?

For the firms this is an opportunity to avoid a lengthy direct authorisation process and test the viability of their business model while keeping costs down. It will also enable greater access to the sector for the innovators.

For the FCA it creates a contained environment within which to monitor and assess innovative business models so they can ensure appropriate consumer protection yet at the same time not stifle innovation and competition.

For the market it provides the opportunity for new ideas that can benefit consumers to be conceived and gain traction. With more products being test, there will be a higher chance of innovative, beneficial and disruptive businesses coming to market.

How will it work?

The FCA is proposing a number of solutions including “a virtual testing environment and setting up authorised umbrella companies that allow innovative companies to act as its Appointed Representatives for the duration of the trial.”

The second solution is offered by Met Facilities. As an FCA regulatory umbrella provider we are able to incubate firms and grant them the permissions and regulatory oversight to conduct their business activity. For highly innovative business models, an industry-led virtual test environment may be more suitable however we are always keen to discuss ways we can provide robust and tailor-made solution for your company.

Next steps

You can find more detail about the FCA Sandbox on their website. Any thoughts or feedback can be provided to sandbox@fca.org.uk.

We are very open to any discussions about your regulatory requirements so feel free to contact us, by phone or email, and we can discuss further.

Image courtesy of Chuck Abbe.

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