Bird & Bird: The FCA has confirmed participation in the GFIN cross-border testing initiative for financial products and services

Bird & Bird: The FCA has confirmed participation in the GFIN cross-border testing initiative for financial products and services

Bird & Bird: The FCA has confirmed participation in the GFIN cross-border testing initiative for financial products and services

On 29 October 2020, the Financial Conduct Authority (FCA) confirmed its participation in the Global Financial Innovation Network’s (GFIN) cross-border testing (CBT) initiative. This means that firms in the UK and worldwide can apply to test their new financial products and services simultaneously against regulatory requirements stipulated by the FCA along with 22 other regulators participating in the scheme.

The Cross-Border Testing initiative 

GFIN originally piloted the CBT initiative in January 2019, after receiving encouragement from industry participators who confirmed the need for a coordinated and harmonised tool which allowed firms to assess their prospective expansion plans against multiple jurisdictional finance regulatory requirements simultaneously.

Following the feedback received from the pilot scheme and as further detailed in GFIN’s January 2020 report, GFIN has provided the following materials and clarification to ease the CBT application process:

1) Single- entry application form

GFIN has now agreed on a single application form where applicants can select all the relevant participating regulators who they wish to apply to, avoiding the inefficiency of repeating information to each regulator individually and requiring regulators to cross reference applications to ensure coherent information has been submitted. It has been confirmed by GFIN that there is no maximum number out of the 23 participating regulators which an applicant can apply to, but firms should note that the form requires the applicant to provide  a detailed ‘rationale’ for applying to each chosen jurisdiction. This also involves confirming whether the firm has existing clients in the relevant jurisdiction, and if not then providing a thought-out plan of how such clients will be sourced in the future.

2) Cross border testing FAQs

This GFIN publication clarifies many queries which arose out of the 2019 pilot scheme, and firms are strongly encouraged to familiarise themselves with the document before commencing the application process. In the document GFIN confirms that firms should focus on submitting for testing only one new product at a time but stipulates that this product or service can range from either Fintech, Regtech or Suptech. The document also highlights that data protection concerns will vary based on each jurisdiction, and the issue of consumer data protection is to be discussed in further detail with each regulator separately during the development process. Full version of the FAQs can be found here.

3) Regulatory Compendium

The Compendium provides a useful comparison of all regulators taking part in the CBT initiative and the various financial activities they support. Applicants are advised to examine this table thoroughly, which can be found here, along with the detailed requirements provided by each regulator on the GFIN website, which can be found here, before submitting their applications.

Next steps

Firms wishing to apply for this cohort of the CBT must submit their applications by latest 31 December 2020, as the date for next set of applications is yet to be confirmed by GFIN. Applicants must note that if applying for this cohort they must be capable of demonstrating full readiness and preparation for the testing phase, as requests made by applicants to defer to the next cohort cannot be guaranteed.

All firms who have applied should hear from GFIN within 6-8 weeks of the closing of the application process, after which each successful applicant will be assigned a lead regulator who will be assisting them with the six months testing period.

The FCA’s participation in GFIN’s initiative illustrates that regulators are aware of the cross jurisdictional regulatory overlaps that have become a common hurdle for financial firms wishing to expand and innovate. The CBT initiative is therefore an invaluable opportunity which provides an applicant with the experience and better understanding of the expansion opportunities available to it worldwide.

Read the original post here. Find out more about Bird & Bird here.

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