Fintech has become one of the most talked about subjects in recent times, with countless entrepreneurs eager to exploit the lucrative and fast growing industry. This is good news for the financial services sector, which will no doubt benefit from exciting new technological developments. There are, however, numerous legal implications which accompany fintech, so here are some of the main ones to consider.
Companies which operate in the fintech sector will be used to collecting masses of client data which is stored on their private systems. Much of this data is sensitive, and as such needs to be effectively protected with the necessary level of security.
The UK government recently announced that firms which fail to protect their data from cyber-attacks could faces fines of up to £17m or 4% of their overall turnover. This shows how seriously fintech firms need to take data protection, and ensure that their security systems are up to date and resilient to the growing threat of advanced cyber-attacks.
The financial sector is known to be one of the most heavily regulated in the world, which makes sense given that most of the companies are dealing with large amounts of other people’s money. As such, fintech companies must comply with all the regulations which are set by authorities like the FCA, or face significant consequences.
This includes regular company auditing as well as meticulous record keeping and knowledge of the regulations which are in place. It is particularly necessary for larger companies, as they usually deal with significant amounts of money, but startups still need to follow the regulations throughout their lifetime, as they apply to all financial services companies.
Operating in a hi-tech, innovative industry, fintech firms often require technological experts (as well as experts of other fields) to be a part of their venture, and this often necessitates bringing the right people in from abroad. Immigration laws can act as a significant barrier to this, depending on the systems put in place by the country.
Companies like Withers can help with issues like these, which usually require legal expertise and the filling in of the correct documents. This also includes sending employees abroad, as fintech companies often need to market their product/service overseas. Once effective framework for dealing with immigration laws is in place within the fintech company, it becomes a much smoother and easier issue to deal with.
Fintech companies need to be aware of laws and regulations, and ensure that they comply from the very start of their operations. That being said, it is by no means a difficult task, and once effective systems are in place to deal with various legal requirements, regular business operations should be able to continue with ease.