International law firm Hogan Lovells has created an online tool to help fintech start-ups navigate the UK regulatory environment.
The new regulatory accelerator will be open to both UK and non-UK-based start-ups, who will be able to better understand the Financial Conduct Authority’s (FCA) regulatory regime, finding information on the FCA application process and eligibility and the key rules that will apply to the business once it becomes authorised.
Seeking FCA approval can be both a time-consuming and expensive process for a fintech company. In a survey of its members, Innovate Finance, a not-for-profit organisation representing the UK fintech community, found that the cost of getting authorised is, on average, around the £200,000 mark, taking into account both internal resources and external advisors.
“Cost and management time devoted to becoming and being authorised are a major investment for any business. We know that the FCA has gone a long way to help with their regulatory accelerator programme, but we also know that this is not available for everyone, so we have created our own tool to address the challenges we see fintech clients facing on a daily basis,” says Rachel Kent, global head of Hogan Lovells’ financial institutions sector. Innovate Finance members will have free access to Hogan Lovells’ regulatory accelerator, as the law firm is a partner of the organisation.
Sound legal advice is going to be particularly important in the coming months, as the UK negotiates its status in the European Union following the Brexit vote. “We expect that fintech companies, just like many of our clients, will need guidance in navigating the regulatory changes that come as a result of Brexit. We will support them with that process, including through the regulatory accelerator, as the future regulatory landscape becomes clearer,” Hogan Lovells senior associate Philippa Verrecchia tells GTR.
According to her, the negotiations may result in creating a less regulated environment: “It’s important to remember too that changes in regulation could open up opportunities for fintechs. For example, Brexit could make it possible for the UK regulator to depart from EU rules, making it even easier for innovative businesses to test their propositions and operate in the UK market,” she says.