The message to FinTechs from the financial markets watchdog in France is clear: industry regulations apply to you, too, and if you don’t play by our rules, we take our ball home.
The Autorité des Marchés Financiers (AMF) regulates participants and products in France’s financial markets and recently created a FinTech, Innovation and Competitiveness division headed by Franck Guiader (see related post here).
In a recent interview with the French newspaper Les Echos, Guiader discussed the nature of FinTech companies and how they may be covered by existing regulations. He defined FinTechs as “a company that uses new technology to offer services or financial products for retail and institutional investors. It could be startups that offer automated advice or turn to investors via, for example, a crowdfunding platform, but traditional companies may also offer similar innovative services or use the services of a FinTech.”
Guiader explained that in respect of a FinTech’s legal status, because of their diversity, a FinTech company may fall into one or more brackets such as that of a Financial Investment Advisor (conseiller en investissement financier – CIF), Crowdfunding Investment Advisor (conseiller en investissement participatif – CIP), an Asset Management Company (société de gestion de portefeuille) or an investment service provider (prestataire de services d’investissement – PSI).
He also noted that the regulatory categorisation of a FinTech company could change during its development and due to changes in its activities. From an investors perspective, he pointed out though, the important thing is “that these companies are subject to appropriate regulation.”
The fact that depending on the business model and activities of FinTech companies regulations may be applicable that are covered by either the AMF or its sister organisation ACPR (Autorité de contrôle prudentiel et de résolution – Prudential Supervision and Resolution Authority), which monitors banks and insurance companies, also explains the double sponsorship of the newly created division.
In addition to more traditional national and EU regulations, France has introduced crowdfunding regulation, which came into force on 1 October 2014 (Official order No. 2014-559 of 30 May 2014 on crowdfunding and its implementing decree No. 2014-1053 of 16 September 2014 specify the regulatory framework applicable to crowdfunding). For more information on this regulation, see our related post here.