Regulatory Business Plan

Nov 7th '19

A Regulatory Business Plan (RPB) Is Your Showcase To Demonstrate Understanding & Forethought.


The RBP should demonstrate that the targets set by the candidate are realistic, as well as financially and operationally manageable.


Some fundamental questions that the RBP must answer:


Why you? The RBP could create a poor impression if it does not describe to the regulator its intended market and comparative advantage: whether it would offer something new to the market and the elements of its services/products that would make them stand out from their competitors.


Answer this – “why are you best positioned to offer and deliver on this proposition?


You against the others: A competitive idea and promising business case is backed up with research and facts. This is a challenging part of the project; the candidate’s RBP must demonstrate that there is a market for their products and services, and also be aware of the competition and their expected share in the market.


Vitally, the RBP must also demonstrate its understanding of the dynamics of the specific market and how the proposed business will meet customer needs.


Known unknowns: Here, the question is how candidates will approach the problem of partial or unavailable information. Some RBPs are extremely ambitious about their target markets and customers; some others are optimistic as to the costs of running a business, especially operational costs and this may lead to expected costs being presented in a superficial manner in the RBP.


All projections and estimates must be backed by thorough and trustworthy market research or accurate business information.


From a regulator’s perspective, stating all the possible expenses and potential financial needs in the RBP provides a useful starting point into assessing business model viability. It also demonstrates that the applicant has a sound grasp of its figures and market.


A start-up may not have all the information to-hand on day-one when it meets the regulator, but it should have reasonable estimates and a plan of the timeline and actions to get this information and must integrate it into the plan before submitting it.


New entrants will have to describe in their plan how they will comply with complex prudential and conduct regulations. This is not easy, even the UK’s most established institutions have got themselves into significant difficulties due to regulatory breaches.


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