Fintech regulation needs to catch up
The current regulatory framework may not be conducive to disruptive fintech business models as it was designed in the early 2000s and legal teams working with those businesses need to be aware of this, The Fold Legal said.
The law firm's managing director, Claire Wivell Plater, said lawyers needed to be innovative when dealing with the regulatory challenges around fintech.
She said the disruption does not just occur in the businesses fintech businesses are competing with, but also occurs within the regulatory regimes that fall under their activities.
"Conventional commercial relationship structures can also be challenging," Wivell Plater said.
"Fintech models frequently disrupt conventional risk allocation between supplier and consumer, so we need to re-think contracts. Inconsistent electronic disclosure regimes are also problematic."
She added that lawyers could become hurdles if they were unwilling or struggle to find solutions for fintech clients.
The answer could be in taking a big picture approach to the law and working from first principles, where lawyers could look at social and commercial policy principles at the root of the current frameworks and attempt to intertwine that when structuring products and services.
Wivell Plater also noted the corporate regulator is willing to engage with fintech businesses to eliminate hurdles but said it will not compromise on current regulatory policy.
"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," she said.
AUTHOR
Malavika Santhebennur
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