FCA and ASIC Cement Commitment with Innovation Hubs

Today Australia’s Australian Securities and Investments Commission (ASIC) and the UK’s Financial Conduct Authority (FCA) signed a world-first cooperation agreement under which innovative Fintech Fintech Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to suppl Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to suppl Read this Term companies will have more support from financial regulators as they seek to expand their business on a global scale and require additional regulatory permissions.

This agreement follows the creation of Innovation Hubs at the FCA and ASIC in October 2014 and April 2015, respectively. The Innovation Hubs were created to help businesses with innovative ideas navigate financial Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term, support them through the authorisation process and engage with the regulator.

Since its creation the FCA has assisted over 200 businesses and 18 with authorisation, while ASIC has worked with over 75 start-ups and granted 10 licences.

Given that the FinTech industries in the UK and Australia are estimated to generate around $12.5 billion (£6.5 billion) and $1.3 billion (£0.7 billion) in annual revenues and both are growing rapidly, it is a crucial time to help FinTech start-ups stifled by regulation get on with their core operations.

Today ASIC and the FCA have attempted to cement their commitment to encouraging innovation in their jurisdictions by acknowledging that national borders shouldn’t limit innovation in financial services.

As a result of the agreement, the FCA and ASIC will cooperate with each other to operate a referral mechanism and share information.

Referral mechanism

The FCA and ASIC will refer innovative financial services businesses (Innovator Business) between their respective Innovation Hubs. The referral mechanism will work as follows:

- Businesses would need to meet the referring authority’s criteria (i.e. either the criteria of ASIC or the FCA) for support.

- After being referred and prior to applying for authorisation to operate in the new market, the receiving authority's Innovation Hub will offer support to the Innovator Business through helping it understand the regulatory framework in the market it wishes to enter.

- Support will be given during the authorisation process with access to expert staff and where appropriate the implementation of a specialised authorisation process.

- After authorisation, the business will have a dedicated contact to refer to for one year.

- The authorities have advised that Innovator Businesses benefiting from their respective Innovation Hub’s assistance during the pre-authorisation phase may or may not meet the requirements for authorisation.

Information sharing

ASIC and the FCA will share information about innovations where appropriate and this is likely to include information about:

- Emerging market trends and developments; and

- Regulatory issues pertaining to innovation in financial services.

With so much activity from ASIC in the fintech space in the past 48 hours, we are eagerly awaiting the government’s policy announcement that is coming out this week. It might exceed expectations.