When it comes to your relationship with your regulator... What should you keep in mind?
A few tips for "new" Fintech Players
Ok, so you’ve decided that you want to work in a highly regulated environment. All I’ll say is that it’s a brave choice which will be filled with challenges.
It’s going to be a roller-coaster ride!
Let’s face it, the relationship with your regulator(s) will deliver some interesting situations to say the least. That is going to be a new kind of relationship you have never experienced before. Some of you certainly went through an application file, or maybe some of you will soon.
Like any romantic relationship, it’s always better if you and your company make a great first impression.
Fear
In all of my experiences within all kinds of institutions in Luxembourg, elsewhere in Europe and within startups, as it is within larger companies, there’s always an air of mistrust. I would go as far as to call it "fear" when dealing with contacts with regulators. Everyone at C-Level or in Compliance always seems stressed when it comes to the regulatory relationship, checking each letter and taking a deep breath before picking up the phone. To me, this level of stress is akin to your maths teacher asking you to come to the blackboard.
Why?
Let’s be clear, the job of the regulator is to ensure that the financial system works efficiently, is under control, and follows the regulatory framework. The biggest risk for the regulator is being blamed by other supra-national institutions and therefore no longer credible vis-à-vis to its counterparts.
They are not your friends, and they will not do any favours. That said, they don’t really have a choice. Regulators are really the ones that will be with you every step of your journey – during your request for approval, at your first visit, during future requests, and of course when things go wrong.
You do get to do what you want to do ...
However, there are five points to keep in mind when it comes to your relationship with your regulator(s). Each member of your ComEx must be aware of this.
Keep In Mind
1– Regulators have upped their games and have recruited highly qualified people who are there to take care of you. Their recruitment drive from the private sector includes consultants, lawyers and compliance officers, all aimed to absorb the amount of work locally and at the supra-national level. And because they’ve worked in the private sector, they are aware of the “business” issues behind each new project.
👉 Tip 1: don’t include “a priori” in your contract deals.
2 – Regulators do not like “amateurism”. Regulators spend their time processing requests to analyse new cases, and as such, when it comes to bad projects, they know what to look out for. So your business plan, strategy, answers, and projections should be absolutely crystal clear.
👉 Tip 2: Be very professional, attentive, reactive in all interactions and don't “b$llsh%t”. It shows incompetence and discredits you and your company.
3 – Regulators are more business-oriented than you think, so be open to discussion.
👉 Tip 3: Come up with proposals to resolve the bottlenecks, and don't hesitate to ask questions.
4 – Remember when you were 18 years old and you were preparing for your final-year exam? You were okay with philosophical quotes: Seneca, Plato and Kant. So the same applies to dealing with regulators. They really appreciate when you deeply understand what they’re doing, the decisions they make and the impacts it has and will have in the future.
👉Tip 4: Ask your C-Level to acknowledge the main regulations related to your business. It’s imperative to understand the challenges of your business.
5 – Last but not least, regulators have to deal with various challenging and complex situations that have political and economical consequences. As a result, be patient when it comes to deliverables.
👉 Tip 5: When it comes to time needed to process your requests … double the time!