The UK Financial Conduct Authority (FCA) and the Australian Securities and Investments Commission (ASIC) have inked an agreement to support innovative businesses seeking to gain entrance into each others markets. The unique arrangement will see financial regulators looking to reduce bureaucratic red tape to help speed to market Fintech oriented firms.
What must be the first of its kind, the collaboration between the ASIC and FCA follows the announcement of Innovation Hubs within each agency in the past two years. These Hubs were crafted solely to provide support for entrepreneurial firms as they navigate the often times confusing world of financial regulation. The FCA is interesting in that its mandate is to promote competition within the banking and securities industry as opposed to only providing investor protection, efficient markets and enforcement. The FCA’s Innovation Hub has apparently supported over 200 small firms and authorized 18 of these new businesses. On the other side of the world, ASIC has aided 75 Fintech firms having granted 10 licenses to date.
Christopher Woolard, director of strategy and competition at the FCA, said that competition is not constrained by national borders. Woolard stated it was important to support new ideas as the benefits could drive value for UK 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. That is why 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.”
Greg Medcraft, chairman of ASIC, said his agency was committed to encouraging Fintech innovation;
”ASIC 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. In particular we have dealt with robo or digital advice, crowd sourced equity funding, payments, marketplace lending and blockchain business models. It is very exciting to observe and clearly some business ideas will want to scale up internationally. We believe this agreement with the FCA will help break down barriers to entry both here and in the UK.”
The partnership will also see ASIC and the FCA sharing information on emerging market trends and their impact on regulation. The FCA estimated that the fintech industries in the UK and Australia are estimated to have revenues of around £6.6bn and £0.7bn a year, with both growing rapidly.
While no similar program exists within the US Securities and Exchange Commission today, recently a new initiative was launched by two Congressional leaders hoping to promote Fintech innovation in the United States.