In recent years, regulators around the world have introduced regulatory sandboxes and other initiatives to help firms test and launch innovative businesses — now, regulators in the U.K. are trying to facilitate the next phase of firms’ growth, building scale.
The U.K.’s Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have accepted the first cohort of firms into their joint “Scale-up Unit,” which aims to provide regulatory support to fast-growing, innovative financial firms in achieving sustainable growth.
The new unit intends to help firms cope with the regulatory challenges that they face when evolving from a start-up to growing business — including regulatory requirements that change as firms grow, and regulators’ expectations as firms expand into new sectors.
Among other things, it will help firms identify regulatory processes that impact their plans for growing scale, and will coordinate interactions with regulators ahead of, and during, firms’ applications to vary their operations.
A group of five banks and one building society form the first cohort, which will receive dedicated support that aims to guide them through the regulatory landscape, “as they develop new products, attract new customers, and move into new markets,” the regulators noted.
The regulators plan to meet with the six firms, both as a group and individually, in the months ahead to provide support — and also to help the FCA and the PRA understand the firms’ challenges, so that they can ultimately improve regulatory processes for the entire sector.
“Welcoming the first cohort to our Scale-up Unit is an important milestone. It shows our commitment to helping firms grow in a sustainable way that benefits the financial services sector and wider economic growth,” said Charlotte Gerken, executive director for U.K. Deposit Takers at the PRA, in a release.
The regulators said that they will invite firms to apply to join a second cohort of firms later this year. The FCA noted that, in the spring, it will offer a new Scale-up initiative for firms that are just regulated by the FCA, expanding the services to investment firms, fund managers and brokers, and other firms under its solo oversight.