The UK Government has been planning to grant temporary licences to fintech companies before providing full authorisation.
Many fintech startups across the UK have long been facing issues when seeking licences from regulators at the Financial Conduct Authority (FCA), with them having to go through delays that last months or even years. During this prolonged period, they often consume their funds and find it challenging to raise fresh capital from investors.
The UK’s plans for fintechs
Plans under the new regime are set to enable companies that meet the entry criterion to go through some regulated activities on a provisional basis, subject to safeguards, while they await completion of the full FCA authorisation process over 18 months.
According to the UK Treasury, with this flexible approach, the government aims to mitigate a substantial barrier to expansion for smaller companies and startups. Additionally, this would support these firms in hiring and investing sooner and would underline the UK’s approach to regulating for growth as well as risk.
Seb Wallace, co-founder at Triple Point Ventures, said in a statement to City AM that this comes as a welcome step in the right direction. He added that, together with this change, the registration regime for Open Banking data users should be abolished, or a similar fast-track registration developed for these companies as well.
Furthermore, Treasury Secretary Lucy Rigby mentioned that, as many promising firms confirmed that their expansion is being hindered by the time it takes to secure full authorisation, this new provisional licences regime will support high-potential startups and scaleups to trade and grow sooner. The move assists firms in starting, staying, and expanding in the UK, thus leading to economic progression.
Additionally, this approach is set to support the government’s commitment to reform the regulatory framework to minimise unnecessary burdens on companies, and for the UK to solidify its position as a technologically-advanced global finance centre.
