UK Law and Practice Contributed by: James Burnie, Kathryn Dodds, Olga Antonova and Holly Joseph, gunnercooke llp
2.7 No-Action Letters Regulators in the UK do not issue “no-action” letters. However, there may be cases where they issue guidance as to the approach they will take in relation to certain business models. 2.8 Outsourcing of Regulated Functions Regulated firms are not able to outsource responsibility for their regulated activities. As such, there are specific requirements for such firms to have a business continuity policy and planning in place. Further, institutions such as banks which pose a market integrity risk, must ensure that they have provisions to keep key operations functioning in the event of – eg, a solvency risk. 2.9 Gatekeeper Liability Generally, for any product there will be a person considered to be “doing” the relevant activity. This person will have to therefore take respon - sibility for the activity, regardless of whether a fintech provider is leveraged in order to provide the product. As such, they will subject the fin - tech provider to appropriate due diligence. Furthermore, for certain activities (for example in relation to payments and certain activities in connection with securities), it may be possible for a fintech to leverage the licence of an existing FCA authorised firm. Where this is the case, the FCA authorised firm will be responsible for, and have oversight of, the fintech provider. 2.10 Significant Enforcement Actions The FCA has taken a variety of enforcements actions in relation to firms that have breached its expectations. Whilst the FCA has taken steps to enforce all aspects of its rules, a particular focus has been on financial crime as a high priority.
A particular area of contention has been the FCA’s use of “name and shame” in respect of publishing the identities of the entities which it investigates. This has caused concern amongst regulated firms in terms of the damage that such an approach causes on the company under investigation. In light of this, the FCA is consider - ing watering down its approach, and for example considering the impact of naming firms (both on the firm and on public confidence in the financial system) before doing so. 2.11 Implications of Additional, Non- Financial Services Regulations Generally, the biggest area of focus is as regards the protection of personal data, with a par - ticular implication in respect of how it should regulated post-Brexit. There is a belief that the existing requirements are relatively onerous in a way which may not be achieving the intended outcome. However, this needs to be balanced against the requirement to continue equivalence with the EU. 2.12 Review of Industry Participants by Parties Other than Regulators Banks have been taking an increasingly inter - ventionist approach towards regulating firms, in particular in terms of not providing banking sup - port to those firms which the bank deems high risk. This has been controversial, as it is open to accusations that banks may act in a way which is anti-competitive – particularly where a fintech concept may be considered a potential alterna - tive to traditional banking. 2.13 Conjunction of Unregulated and Regulated Products and Services Generally, firms offering unregulated products and services in conjunction with regulated prod - ucts and services are required to be very clear with consumers which products are/are not
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