A Guide to Financial Regulation for Fintech Entrepreneurs

CHAPTER 3Regulation in Practice

Ultimately, regulations are simply laws that have been decided upon by a legislative body, that is, implemented by an executive body, and whose implementation is overseen by a judicial body.

As legislation, it is implemented in the way all legislation is implemented: the legislative body—typically the parliament—enacts primary legislation. This primary legislation gives explicit power to some other agencies—typically part of the executive—to enact secondary legislation that acts within the framework of the primary legislation and that deals with minutiae and details that would overload the primary legislation process. The process itself, in particular at the primary legislation level, is not particularly interesting in the context of this discussion. What is interesting, however, is how legislation across different jurisdictions is harmonised, and I will discuss this, and the bodies that are responsible for secondary legislation, in the section that follows.

Financial regulation is very important for the functioning of the economy, and every jurisdiction has multiple executive bodies that oversee its implementation. EU legislation refers to them as ‘competent authorities’, and in common language they are mostly referred to as ‘regulators’. I will stick mostly to that second term, but we must keep in mind that it can refer both to dedicated regulatory authorities and to other authorities that have been given executive functions in this context, ...