The necessity of compliance

Featured image

One of the hottest topics in fintech right now is related to processes that need to occur prior to any sort of software development. “Compliance” is the banner term used to refer to adherence to all the national and international regulations that must be followed in order to release a compliant financial product. Releasing software or digital services that don’t comply with those rules leaves the company developing the product open to potential litigation, significant regulatory sanctions, and other penalties.

To what, exactly, does compliance refer?

Generally, fintech compliance revolves around adhering to regulations concerned with new business models and financial technologies. These regulations are in place specifically to safeguard the rights of consumers, provide protection for investors, and ensure no laws are inadvertently broken. Launching a piece of financial software or a website on the market without making sure the project complies with existing regulatory requirements therefore involves considerable risk. A regulating body will almost certainly become aware of it and take the appropriate action, which can be severe.

How difficult is it to ensure compliance?

In a word, quite. Imagine a company wants to launch a financial service app in the UK, but the goal is to expand beyond the UK’s borders and offer it throughout the EU and eventually beyond.

  • First, the company would have to make sure it is following all the UK’s regulatory requirements governing financial services.
  • Second, as a digital product, there are rules and laws related to user privacy and distribution that are specific to the medium that would also need to be reviewed and followed.
  • Third, the EU has its own set of regulations.
  • Fourth, each EU member state has a myriad of laws and rules, meaning that even after dealing with the umbrella regulations of the EU, details on each country where the product will be offered will need to be taken into account.
  • Fifth, offering the product worldwide has the same difficulties as launching EU-wide on a larger scale.

Ensuring compliance can be challenging, to say the least. Nine times out of ten, a new venture in the UK will fall under the jurisdiction of the FCA with regard to regulation compliance. There are, however, many different areas of regulation that may be relevant to specific business models including Consumer Duty, the Payment Services Directive (PSD2), and Electronic Money Regulations 2011 (EMRs). There are also other rules specific to financial crime risk, including Anti-Money Laundering (AML), Counter-Terrorist Financing (CTF), Anti-Bribery and Corruption (ABC), Anti-Facilitation of Tax Evasion (AFTE), and general fraud.

How can a company ensure full compliance?

If a company decides to hire an in-house compliance expert, that person may still not be fully cognizant of the various layers of regulatory compliance in every space to be exploited or be completely abreast of the ever-changing landscape. Fortunately, there are specialist compliance advisers available that can offer companies assistance. By employing their services, companies can save time and money as well as lower regulatory risk.

Who does Toqio trust?

Toqio’s operations are totally compliant and involve offering a platform where customers can configure, customize, and generate a digital finance product. Quite often, our customers want to ensure they are compliant prior to getting started with a build and they request we recommend a leading firm to help them. We typically refer them to Thistle Initiatives.

Compliance is a key part of Thistle’s offering, along with other services that make it a great choice for anyone thinking of starting or acquiring a business. We’ve found that Thistle offers services that are not only comprehensive, they’re also tailored to client needs. Let’s say you want to release an investment or payment app that has some innovative new features. Potentially, you’re going to need to make sure your company and product are compliant with MiFID II, MIFIR, the Data Protection Act, the Senior Managers and Certification Regime (SM&CR), the Payment Services Directive (PSD2) and the FCA’s Client Assets Sourcebook, to name just a few. Thistle can help with all of that.

Thistle provides expert advice and guidance through several offerings for clients, including a hands on end-to-end application support package featuring a suite of compliance policies and procedures. They also provide an easy-to-use online knowledge base, ad hoc advice for clients, training on regulatory roles and responsibilities, compliance audits, assistance with the submission of FCA applications and returns, and periodic FCA development updates.

When a prospective customer comes to us from Thistle Initiatives, we know that they’ll be able to jump right in and start creating their solution immediately. By ensuring they work with qualified experts, they cut down their time to market significantly: a bit of forethought means they get their product in front of their customers more quickly and securely.

Stay up to date
with all our exciting news!