The European Banking Authority (EBA) has published its EBA Report on Regulatory perimeter, regulatory status and authorisation approaches in relation to FinTech activities of 18 July 2019 describing the regulatory framework applicable to fintech firms when accessing the market. The report sets out the EBA’s findings from an analysis of national developments on the regulatory perimeter for fintech activities and services, the national regulatory status of fintech firms and the authorisation approaches of national competent authorities (NCAs) under the current EU legal framework.
Key findings of the report include:
- there is little national legislative activity impacting the regulatory perimeter of NCAs under the EBA’s remit;
- certain activities by fintech firms, such as payment initiation services and account information services, now fall under regulatory regimes due to the transposition of PSD2;
- ancillary or non-financial services provided by fintech firms remain outside of regulatory regimes, with the exception of those related to crowdfunding and, to some extent, cryptoassets; and
- principles of proportionality and flexibility during the authorisation process are applied in the same way irrespective of whether the applicant is a traditional or fintech firm.
In light of these findings the EBA intends to continue observing activities in the market but does not feel it is necessary to make any specific recommendations at this time. However, the EBA notes that additional work could be carried out on the special regime under CRD5 which allows institutions with a capital lower than EUR 1 million to be authorised as a credit institution, and the application of this regime to fintech firms.
The EBA states that the Report is based on one of the action points of the European Commission’s FinTech Action Plan published in March 2018 inviting the European Supervisory Authorities (ESAs) ‘to map current authorising and licensing approaches for innovative FinTech business models’. The Commission asked the ESAs specifically to explore how proportionality and flexibility in the financial services legislation are applied by national authorities. The Report delivers also on the EBA’s FinTech Road map of March 2018, which in line with the Commission’s FinTech Action Plan, identified the monitoring of the regulatory perimeter, including the assessment of current authorisation and licensing approaches to FinTech firms, as one of its priorities for 2018/20