The challenge
Thistle Initiatives was approached by a group of experienced payment services professionals looking to launch a start-up with a relatively complex hybrid business model combining traditional merchant acquiring with an AISP/PISP open banking approach.
The client’s core target market was larger retailers keen to be able to accept payments direct from customer’s bank accounts, but less keen on dealing with the logistical complexity of having thousands of real-time payments arriving singly in their bank accounts. The start-up’s plan involved replicating, for open banking payments, the same batched-up approach larger retailers are familiar with from dealing with traditional merchant acquirers. Because this required receiving and relaying payments from retailers’ customers, it inevitably meant securing a broader range of authorisations from the FCA than other PISPs would typically require.
None of the principals in the new venture had direct experience of applying for FCA authorisation, but they knew enough to know that they needed support and assistance in navigating the process. They turned to Thistle Initiatives based on an awareness of our specialist expertise and experience in the payment services sector. With hundreds of FCA authorisation projects under our belts, we were quickly able to reassure the client that we were the right people to advise and assist them with the process of becoming a fully authorised payment services provider.
The solution
The first step was making sure we had completely understood the new firm’s proposed business plan and identified precisely which licences it needed to apply for, and which permissions and authorisations would be required to put their plans compliantly into practice. During this early stage in our involvement, we were also able to put them in touch with trusted specialist providers in a number of other disciplines relevant to the business of getting the new company up and running. These included safeguarding providers, IT security consultants and lawyers.
We allocated two senior members of our team to work on different aspects of the client’s application. We carried out a series of interviews with members of their team to gather the information required to complete all of the forms - more than 150 in total - they would need to submit for an authorisation of this complexity. We then prepared all this documentation, ensuring it was fully tailored to the specifics of the business, and properly reflected the carefully considered rationale for its applying for the specific licences and authorisations sought. These drafts then went back to the client for review and revision. Even for a client with previous experience of regulatory applications, the time it takes to prepare such an array of documentation would have been a significant drain on limited management resource. For a start-up like this, keen to get up and running as soon as possible, the ability to outsource the work involved to an experienced and knowledgeable provider who can get through the work rapidly and authoritatively is all the more valuable.
Added to this, of course, is the obvious benefit of our extensive knowledge and expertise.
We understand, from long experience, exactly what to say, and how to say it, across the whole gamut of documentation required. We know what the regulator is looking for and can anticipate the kind of challenges it will make to a firm’s business plan, financial forecasts, and its provisions on everything from governance and safeguarding to business continuity and wind-down plans.
Once the client and our own consultants had fully reassured themselves that all aspects of the application were in order, we helped them with the process of submitting all these documents, uploading them via the FCA’s Connect system.
Then, once the client had been assigned a case officer by the FCA, we hand-held them through the various rounds of questioning that inevitably ensue with any application - however simple or complex it may be. These interactions with the case handler may be face to face (or its remote equivalent) or through email correspondence. In this case, it was a combination. At every step along the way, our consultants supported the client’s representatives, advising and coaching them on how to respond so as to move matters forward as smoothly and rapidly as possible.
The result
Once all queries had been successfully dealt with, and minor updates made to one or two documents, the client gained the authorisation it needed and was ready to put its plans into practice. Of course, authorisation is only the first step on the compliance journey. During our engagement, we had taken the opportunity to educate and prepare the client team for the ongoing task of operating compliantly. Based on the instrumental role our expert team had played in getting its application over the line, efficiently and painlessly, the client retained Thistle Initiatives to provide ongoing compliance support as and when required.
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Contact us on 0207 436 0630 or email info@thistleinitiatives.co.uk.