Claire Wivell Plater
Legal teams assisting fintech businesses need to be innovative when dealing with the legal and regulatory challenges posed by fintech, according to The Fold Legal (The Fold).
“Fintech businesses are by their very nature disrupters,” says The Fold managing director, Claire Wivell Plater. “The disruption isn’t confined to the businesses they’re competing with; it also extends to the regulatory regimes that cover their activities.”
Ms Wivell Plater says the current regulatory framework didn’t have many emerging products and services in mind when it was designed in the early 2000s and it can therefore be challenging to fit disruptive business models into it.
“Conventional commercial relationship structures can also be challenging,” she says. “Fintech models frequently disrupt conventional risk allocation between supplier and consumer, so we need to rethink contracts. Inconsistent electronic disclosure regimes are also problematic.”
All of these issues can impede fintech businesses getting to market. “If lawyers are reluctant to sign off or struggle to find solutions for fintech clients, we can become roadblocks.”
Ms Wivell Plater argues that the solution lies in adopting a big picture approach to the law and working from first principles. “If an innovation doesn’t fit within existing norms, it helps to look to the spirit of the law,” she says. “By looking to the social and commercial policy principles underpinning the existing frameworks and seeking to achieve those when structuring products and services, the task of helping fintech businesses break through becomes much easier.”
Because many fintech solutions are business to consumer, consumer protection principles must be at the forefront. “Given the complexity of the current regulatory regime, particularly for financial services, simplicity and transparency should always be key objectives.”
And when dealing with fintech businesses, a test-and-learn approach helps, she says.
She also believes in collaborating with the regulators. “The good news is that ASIC has recognised this and is actively seeking to engage with fintech businesses to help remove obstacles.”
She says while ASIC has made it clear it won’t compromise existing regulatory policy, the regulator is willing to have a conversation in advance. “That is a really helpful process because ASIC is providing guidance on their likely view and is showing willingness to work together to map the way forward. This can significantly shorten the time to market.”
