Addleshaw Goddard has advised the fintech firm, Exepay Ltd, on securing authorisation from the FCA as an Electronic Money Institution.

Steven Francis, a Partner in the Financial Regulation team, and Nikesh Shah, a Senior Compliance Manager, provided legal, risk and compliance support on Exepay's FCA application.  

In recent years, securing FCA authorisation has proven more difficult. Here are a few tips on the authorisation process:

• Any business seeking to apply to the FCA to become authorised in any respect, whatever the proposed regulated activity, needs to prepare for a very rigorous examination.
• It is not enough to demonstrate that a business can comply with regulatory requirements, the FCA will need to see that authorisation applied for is required. For example, applicants will need to explain why their business model requires them to issue e-money and also why it can be expected to succeed in the competitive market in which it will operate. The proposition must appear credible and able to generate the revenues predicted in the financial model produced.
• The authorisation process is not swift. Applicants must be prepared for weeks of delay while they answer questions from the regulator; and for the possibility that their application may not be successful the first time.
• The key document is the Business Plan, it's there that firms tell the story of the tribe – why was the company formed and by whom; how was the senior management team put together; what is the business that requires the permissions sought; what are the risks and how will they be managed and mitigated? This document should have a serious tone, akin to an annual report.
• It is vital the FCA understands that if the company fails it will do so in an orderly manner. Ensure the wind-down plan is considered and include wind-down financial data as well as words in the application. This doesn’t look pessimistic, it looks responsible.

Steven Francis, Partner at Addleshaw Goddard said:

"There has been much said about the FCA's approach to e-money authorisations, and the possibility that its rigorous stance inhibits the growth of a leading fintech hub in the UK. We have found the FCA to be firm and tenacious. There is clearly a desire to ensure that inappropriate businesses are not authorised.

"The perception is that e-money firms represent a greater regulatory risk than had previously been assumed, and that judgment seems correct to us. But the FCA has a duty to approve suitable businesses, who can persuade them that they can safely operate in the regulated sphere, and in that regard, we believe the FCA is performing its role well.

"While there are inefficiencies in the process, and they can be frustrating, successful applicants ride those punches and focus on meeting the regulators' information needs."