ASIC AND THE FCA ENTER INTO A CO-OPERATION AGREEMENT TO SUPPORT INNOVATIVE BUSINESSES

On 23 March 2016, the Financial Conduct Authority (FCA) and the Australian Securities and Investments Commission (ASIC) (the Authorities) entered into a co-operation agreement.

Both the FCA (Project Innovate, October 2014) and ASIC (online Innovation Hub, April 2015) have recently established innovation hubs designed to promote financial innovation in their respective markets. The co-operation agreement sits within the context of these two initiatives and is designed to provide a framework for co-operation and referrals between the innovation hubs of each authority. 

Referral mechanism 

The two Authorities agree to refer to each other, through their respective innovator hubs, innovator businesses who would like to enter the other’s market. Each Authority will set out a Criteria for Support which will outline the criteria that must be met, from time to time, by an innovator business before a receiving Authority will offer its support to the business. Referrals shall be made in writing and outline how the innovator business meets the receiving Authority’s Criteria for Support. Once the referral has been made, the receiving Authority will support the innovator business in accordance with the agreed terms outlined below.

Support provided 

Support offered by the Authorities to incoming innovator businesses includes:

  • a dedicated team and contact for each business; help for the business to understand the regulatory framework in the relevant Authority’s jurisdiction;
  • assistance during the pre-authorisation application phase to discuss the authorisation application process and any relevant regulatory issues identified;
  • an authorisation process for innovator businesses that efficiently deals with applications for authorisation including:
    1. consideration by relevant authorisation staff of any assistance provided to the business during the pre-application phase; and
    2. the allocation of authorisation staff that are knowledgeable about financial innovation in their respective markets to consider the application; and
  • a dedicated contact and the provision of additional assistance for the first year after the business is authorised.

Information sharing 

The co-operation agreement also sets out that the Authorities agree to share information about relevant innovations where appropriate, including, but not limited to, emerging market trends, and developments and regulatory issues pertaining to innovation in financial services.

Christopher Woolard, FCA director of strategy and competition, comments that, along with ASIC, the FCA aims to reduce the barriers for authorised firms looking to grow to scale overseas, and to assist non-UK innovators interested in entering the market overseen by the FCA. He adds that the FCA hopes the agreement with ASIC will be the first of many such agreements.