Answer ... One important tip for fintech players hoping to operate in the United Kingdom is to understand the wide variety of regulations within the UK regulatory regime and exactly how this will affect their business. For example, a fintech player that enters the United Kingdom may need to seek Financial Conduct Authority (FCA) authorisation from day one if it falls within the regulatory perimeter (subject to any exemptions) – something that many fintechs may not have considered if they are not familiar with UK/EU regulation. If regulatory processes and associated costs are not properly factored into business plans, this can be a challenging sticking point, particularly for early-stage start-ups. It will also be critical for fintechs to understand the privacy regime in the United Kingdom under the General Data Protection Regulation. Regulatory penalties can be very high and the regulations apply even to fintechs whose business model may not primarily involve the processing of personal data.
A tip to avoid coming unstuck in the regulatory landscape is to engage with regulators early in the process. The FCA in particular has made great efforts to support early stage fintechs with initiatives such as Project Innovate, which gives participants access to dedicated support and advice directly to assist new players with their regulatory queries. The FCA has also consistently run its regulatory sandbox initiative to enable new market entrants to operate their system or product within a controlled, regulated environment. This can be very helpful for early stage companies to understand how regulation impacts their product in a real-world scenario without facing reprimand.