We are Starting our Regulatory Journey

We are Starting our Regulatory Journey

Simon Jenner

Tuesday, 6 July 2021

We had a lovely first meeting with the FCA last week. We have a long road ahead of us, but we'll have great support from our regulator.

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Last week we kicked off meetings with the FCA innovation team to try and get out ahead of some of the challenges we think we’ll have over the next twelve months. While what we do has proven to be economically viable, delivers amazing outcomes for our founders and helps the economy in general, it’s also upside down and inside out as far as the industry is concerned. 
Put simply we are using a low value / high volume model in an industry build for high value / low volume. That comes with cost, compliance and comprehension challenges. However, rather than giving up and going home we are pushing on to make our model work. 
This isn’t my first time at this rodeo. I have been out front in quite a few changes in the financial services market, not least of which was the introduction of e-money licences back in the early ‘Noughties’. The trick is to engage with the regulator early, listen to what they have to say and not to try to circumvent the rules. If you are prudent, conduct yourself well and ensure that you protect your customers you can’t go far wrong. As an old boss of mine once put it succinctly, “We don’t fuck with people's money.”
Million Labs is taking a big step towards becoming a fully fledged Fintech right now. We have begun the journey of raising our first fund. To grow our investment business we are going to need to start to raise investment ourselves. This puts us in the odd position of hearing and giving pitches in equal measure. Like a bank, for money to go out we need money to come in. It’s a new world for me (I get to add Venture Capital to my banking bingo card) but fortunately there are plenty of good people around us to assist. 
This reminds me of a story my wife tells. A few years ago I was hired to build a bank for a rather large and scary entity. I was given a blank sheet of paper to start from (literally). When my wife asked me “How on earth do you know how to build a bank?!” I answered offhand that I'd Googled it. And that’s true. I actually did Google “how to build a bank.” Of course, that’s not the whole story. While the internet is an awesome resource thankfully experience still counts for a lot. 
The main thing experience taught me was that you need help and that help needs to come from qualified professionals. When you’re doing something grown up don’t scrimp on professional advice but don’t hire a bunch of unqualified middle-management consultants either. Get a good lawyer, an excellent accountant and reach out to the regulators. Keep a close eye on the bank and build a management team from people that qualify themselves with results. Most of all be patient. 
I had a chat with a good friend that’s CEO of a large financial services company this week. They have been presented with an awesome opportunity but to pursue it would put the whole enterprise at risk. Feeling great chagrin my friend had called to vent a little frustration. He knows as well as I do that, while this opportunity might slip through his fingers, there will be others that don’t require unacceptable risk. Patience is a powerful strategy. As I always say to my kids “Remember the story of the three Japanese generals!”
I need to remember that story too. Waiting to close our first fund is infuriating, distracting and is impacting our day to day trading but we’ll get there. We have secured our own Legal IP and proven our own business assumptions. We’re doing the same homework that we want our Founders to do and we are taking our time to get things right. It is important that we are prudent, conduct ourselves well and that we protect our customers. That’s not something you can do in a rush. We’ll get there. 
The Story of the Three Japanese Generals
This story is told to help children understand the character of the three great names that unified Japan: Oda Nobunaga, Toyotomi Hideyoshi and Tokugawa Ieyasu. I embellished it to teach my kids about patience. It goes something like this: 
Oda Nobunaga, Toyotomi Hideyoshi and Tokugawa Ieyasu were sat on their stools after a great battle when a Nightingale alighted on a nearby tree. Rather than singing it rested, preening its feathers. 
Oda Nobunaga, frustrated that the bird would not sing told the other generals, “If that bird won’t sing I’ll kill it!” Hideyoshi Toyotomi responded, “If that bird won’t sing I’ll make it sing!”
But wise Tokugawa Ieyasu ignored their impatience and waited in peace until the other generals had gone. After some time the little Nightingale started to sing its beautiful song.

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