The UK’s Financial Conduct Authority (FCA) and the Australian Securities and Investments Commission (ASIC) has joined forces to monitor the global financial technology boom.
The UK’s regulator said that both watchdogs will refer to one another relating to any “innovative businesses seeking to enter the other’s market”.
The fintech industries in the UK and Australia are estimated to have revenues of around £6.6bn and £0.7bn a year respectively, with both growing rapidly. This rise has alerted both authorities to act.
The regulator said that both will aim to provide support to innovative businesses before, during and after authorisation to help “reduce regulatory uncertainty and time to market”. The move will allow shared information between both countries to help bring those businesses that meet each countries regulatory criteria to market whilst ensuring that those that fall short are spotted.
‘Financial services isn’t limited by national borders’
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.”
‘Surge in requests by fintech startups’
ASIC chairman Greg Medcraft added that the Australian regulator 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,” he said. “In particular we have dealt with robo or digital advice, crowd sourced equity funding, payments, marketplace lending and blockchain business models. We believe this agreement with the FCA will help break down barriers to entry both here and in the UK.”
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”, but also acts as an additional buffer to ensure these new technological start-is are monitored effectively.
To date the FCA’s Innovation Hub has supported over 200 businesses yet only 18 of these businesses have now been authorised. Likewise, ASIC has dealt with over 75 innovative start-ups and granted just 10 licences.
The FCA’s Woolard added: “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.”
‘Innovator businesses’ will need to meet the eligibility criteria of their home regulator’s Innovation Hub before it can be referred by the regulator to apply for authorisation to operate under the regulator’s license.
ASIC and the FCA said that they have also committed to share information on emerging market trends and their impact on regulation.