FCA launches bespoke support service for innovative financial services firms

Out-Law News | 20 Apr 2022 | 2:57 pm | 2 min. read

The UK’s Financial Conduct Authority (FCA) has announced the launch of a unified support service designed to provide bespoke regulatory support to innovative firms.

‘Innovation Pathways’ combines the FCA’s direct support and advice unit services. In a speech given to the Innovation Finance Global Summit in early April, FCA chief data, information and intelligence officer Jessica Rusu said the unit would support firms that wanted to deliver “positive innovations and consumer outcomes in the market”.

“There will be a greater focus on sharing insights into our data and the support provided to firms,” Rusu said.

The new unit will work alongside the FCA’s regulatory sandbox, which was first launched in 2015 before being expanded last year to be ‘always open’.

In an explanatory document on its website, the FCA said Innovation Pathways would help firms understand the complexities of regulation, the implications for their business model, and how to launch a regulated business.

Firms which apply successfully to the FCA’s Innovation Pathways will be assigned a dedicated case manager to provide insight, clarity and feedback on their business model, and will receive support to navigate their way through FCA processes and understand its rules.

According to the FCA’s explanatory document (12-page / 2.8MB PDF), the service will help firms to understand whether a specific rule or piece of guidance applies to their business, and there will be “informal steers designed to clear up grey areas of regulation or to clarify where guidance may be ambivalent”.

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Andrew Barber

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Exploring fresh ideas and joined-up thinking as to how industry and regulators together can work better, potentially at both a systems and conduct level, will be welcome by all market participants in the payments space

Through Innovation Pathways, the FCA will also offer firms pre-authorisation meetings to clarify the authorisation process and the standards they must meet and provide dedicated supervisory support for the first year after authorisation to ensure a seamless experience of the regulatory process.

The FCA said the service was for authorised firms, unauthorised firms requiring authorisation, and technology providers looking to deliver innovation to UK financial services firms or consumers. Applications can come from firms of any size and in any stage of development, and must meet the FCA’s eligibility criteria. The criteria include that the firm is doing something genuinely innovative that relates to the UK’s financial services markets and that will provide consumer benefit.

Rusu said that FCA data showed a high proportion of firms that had used its existing innovation services had successfully become authorised.

“Alongside our now ‘always open’ regulatory sandbox, Innovation Pathways will play a key role in informing and ensuring our regulatory environment is fit for future innovation,” Rusu said.

“The FCA vision is to be even more innovative, led by data and technology. Ever more assertive to ensure consumer protection and market integrity. And ever more adaptive to ensure that regulation supports the fintech community. Innovation serves as the golden thread that ties these qualities together,” she said.

Rusu also spoke about the FCA’s aims to position itself as an intelligence-led regulator in the future, with innovation and technology at the heart of its corporate priorities. The FCA will be holding its first ‘CryptoSprint’ – an industry engagement exercise to help inform future policy – in May, followed by a ‘TechSprint’ on authorised push payment (APP) fraud, together with the Payment Systems Regulator (PSR), in September, she said.

Financial services expert Andrew Barber of Pinsent Masons said: “With the upsurge in holdings of cryptoassets by often younger investors, and the social media enabled marketing of these assets, it will be interesting to see what outcomes there will be for regulation and for the regulator as a result of its engagement with industry in this space at the CryptoSprint”.

“It is also good to see a joined-up approach by regulators on addressing APP fraud. This area of fraud is a costly and growing area of concern in the market. It can also be a cause of acute harm to consumers, who are at risk of losing sometimes life-changing sums of money. Exploring fresh ideas and joined-up thinking as to how industry and regulators together can work better, potentially at both a systems and conduct level, to deter, identify, and prevent this fraud will be welcome by all market participants in the payments space,” he said.