Australia and UK Establish “Fintech Bridge”: A Model for Canada?
On March 22, 2018, the United Kingdom ( “UK”) and Australia established the UK-Australia Fintech Bridge, to:
- enable closer and stronger collaboration on Fintech between governments, financial regulators and the industry; and
- encourage Fintech firms to use the facilities and assistance available in the other jurisdiction to explore new business opportunities and reduce barriers to entry.
The Fintech Bridge sets out a framework for ongoing cooperation between the UK and Australia on Fintech issues, covering four inter-related “pillars”:
- Trade and Investment
Highlights of the priorities, initiatives and commitments described under each of these pillars are outlined below:
The UK and Australian governments will to work together to develop Fintech policy as between the two nations and on a broader, global scale. Specifically, representative policy officials and regulators from each of the UK’s HM Treasury and the Australian Treasury (the “Government Authorities”) have committed to ongoing, working level, quarterly discussions about Fintech policy development in each jurisdiction. The discussions will focus on the perceived challenges faced by Fintech firms looking to scale up in each other’s markets, as well as various “timely” industry issues, such as blockchain, data security and exchange, RegTech and WealthTech. The Government Authorities have also committed to investigating options for developing complementary open banking regimes to provide opportunities for mutually beneficial trade. At an international level, the Government Authorities will prioritize (i) senior-level dialogue on Fintech and broader financial regulatory policy issues when opportunities arise, for example, at the International Monetary Fund and G20 forums and (ii) the development of International Standards for Blockchain.
The UK’s Financial Conduct Authority (“FCA”) and the Australian Securities and Investments Commission (“ASIC”, together with the FCA, the “Regulator Authorities”) will focus on facilitating the entry of Fintech start-ups from the other jurisdiction into their respective regulatory sandboxes. Under this pillar, the Regulatory Authorities have committed to, among other things: (i) engage in at least quarterly dialogue to share information on emerging market trends and their impact on regulation; (ii) explore opportunities to enable quicker processing in terms of licensing innovative businesses already licensed/authorised in the other jurisdiction and (iii) consider developing shared approaches towards technologies that require research and testing. The FCA and the Australian Transaction Reports and Analysis Centre (“AUSTRAC”) will also hold quarterly teleconferences to engage on matters of mutual interest including Anti-Money Laundering/Counter-Terrorism Financing regulation, compliance with the Financial Action Task Force Standards, Fintech and RegTech. An AUSTRAC officer will also be posted, on a temporary basis, to the FCA in 2018 to enable coordinated regulatory actions on regulated entities and develop joint projects, particularly with regard to identifying direct financial links between Australia and the UK and monitoring new payment technologies.
Trade and Investment
The UK’s Department for International Trade (“DIT”) and the Australian Trade and Investment Commission (“Austrade” together with DIT, the “Trade and Investment Authorities”) will support cross-border opportunities by, among other things, (i) providing bespoke strategic advice to Fintech firms establishing operations in either country, (ii) establishing points of contact to offer assistance on queries and support the identification of cross-border opportunities, (iii) establishing introductions between the Trade and Investment Authorities’ relevant personnel working in Fintech and (iv) facilitating matchmaking events, meeting and networking opportunities for UK and Australian companies with potential partnership prospects.
Additionally, each of the Trade and Investment Authorities have committed to supporting Fintech firms from the other jurisdiction by promoting Fintech Bridge activities and opportunities. The Fintech Bridge expressly contemplates promotion through high profile events and conferences, such as an annual Fintech competition—whereby competing Australian Fintech firms will have the chance to win a personalised trip to the UK for the purpose of business development and international expansion.
Both the UK and Australian governments will support active engagement from Fintech industry bodies, specifically, by welcoming business-to-business summit discussions involving industry representative groups, which will be co-chaired for the UK by the Prime Minister’s envoy for Fintech and a Fintech Australia nominee. The governments also explicitly support an initial forum to explore collaboration around blockchain technology. Additionally, the Fintech Bridge suggests that Australia and the UK may, in the near-term, with the support of Fintech industry stakeholders, introduce a fixed-term reciprocal membership agreement for UK and Australian Fintech firms establishing in each market.
The UK has similarly expressed interest in establishing a UK-Canada Fintech Bridge, which could be attractive to Canadian Fintechs seeking to expand into the UK. In addition, Canadian securities regulators have already started collaborating with counterparts in Australia and the UK, with the Canadian Securities Administrators having signed a cooperation agreement with ASIC and the Ontario Securities Commission having signed a cooperation agreement with the UK FCA, in each case to help Fintech companies navigate their respective regulatory environments.
Based on current Canadian trade negotiations, it appears that technology will be playing an ever-increasing role in trade policy. Issues of the day such as data localization thresholds and rules which are in the NAFTA renegotiation discussions could well impact the administration of any Fintech Bridge.
For more information about our firm’s Fintech expertise, please see our Fintech group’s page.