Financial regulatory services

With the implementation of the PSD2 Directive, the financial services industry has become increasingly focused on payment services.

Payment services are changing, and we expect to see new players and new technologies in the market in the years to come.

We have considerable experience with payment services in the banking sector and from consulting with payment institutions, as well as from assisting fintech companies and start-ups.

Our experience covers mapping, interpretation and compliance with regulatory obligations; assisting payment institutions to apply for a licence, including as a payment initiation service provider pursuant to PSD2; and correspondence with the Financial Supervisory Authority of Norway. 

Banking is currently undergoing significant changes, and terms like "open banking" are frequently used to describe the changes taking place in banks.

Banks are now providing more services and products than ever before, and this means banks are also finding that they have become subject to additional sets of regulations. At the same time, we are also seeing a move towards tighter regulation of the financial services industry, especially at EU level, and this is also affecting banks.

Here at PwC Legal, we assist banks to comply with regulations related to the Financial Contracts Act, the Financial Institutions Act, the organizational and financial regulatory requirements banks are subject to, customer terms and conditions and customer service, and the mapping, interpretation and compliance with new EU regulations.

The financial services industry is among the first industries to be affected by the EU’s efforts to combat climate change. The European Commission’s Action Plan includes a long list of regulatory changes that will affect licensed activities in both the short and the long term, and the first of these changes take effect as soon as 2021.

We monitor the regulatory process in the EU and Norway closely, and PwC Legal has established its own European network of expertise.

We assist our clients with basic understanding, strategic approaches to sustainability, and project execution through our Reg+ team.

Asset managers and investment firms are subject to stringent regulations in most of their activities — customer service, asset management, corporate rules, compensation schemes and marketing activities are all subject to various requirements.

What constitutes regulated asset management is also changing — most recently with the AIFM Directive and its interpretations.

Services provided by investment firms range from standardized fund products to small investors to highly complex services and products provided to professional investors and issuers.

All these activities are, however, regulated by the same set of provisions, which, with the implementation of the MiFID II Directive, are extremely detailed and comprehensive. Manoeuvring the many “layers” of these regulations requires insight and a deep understanding of the services provided.

We regularly assist investment firms with specific assessments, reviews and updates of existing procedures and customer terms and conditions, and anything else they may need.

Technology offers endless opportunities for new business models, services and products. The term “fintech” may include “sharing services” for assets, “platforms” for the trading and provision of rights, development of new payment solutions or credit products, and a wide range of other things.

What many developers of fintech solutions have in common, is that they at some point will need to find out whether the activity they are planning will be subject to regulation, and, if so, which requirements the service or activity will be subject to.

Crowdfunding is a good example of this. Is the capital equity, a loan, a gift, “crypto-assets” or a combination of these?

The answer to this question will determine whether they are subject to licensing and which requirements apply.

We are affiliated with Finance Innovation (Norwegian Centre of Expertise) and its efforts to develop the fintech area in Norway. In this connection, we are helping to provide legal clarifications related to, among other things, licensing.

Taking part in the development of new solutions is at the core of the PwC Legal strategy, and our employees are passionate about this field.

“PwC's lawyers have assisted us here at Nets in the development and launch of Open Banking services in Norway. In doing so, their business understanding, pragmatic approach and customer-oriented focus were invaluable to us. I wholeheartedly recommend their services to other organizations in this growing fintech segment.” — Anna-Karin Østlie — Director of Payments Norway — Nets Centurion

Debt collection

PwC Legal has broad experience and expertise in the area of debt collection. This includes everything from assessing whether an activity constitutes debt collection, which is subject to licensing, to consulting with collection companies on regulatory issues and assisting them in legal processes in connection with the collection and execution of claims.

In January 2020, a working group appointed by the Norwegian Ministry of Justice and Public Security prepared a report on the current Debt Collection Act and proposed relevant amendments. The working group proposed a wide range of amendments to the debt collection regulations, including requirements to establish electronic claims processing solutions, further specification of the term "good collection practice", and recommendations for more detailed requirements for the content of debt collection notices, final requests for payment and notices of legal enforcement.

The working group also recommended imposing an obligation to respond to objections to claims and complaints about collection methods, and an obligation to register these objections and complaints.

Furthermore, the group recommended that debt collection companies be required to facilitate the adoption of extra-judicial solutions instead of demanding legal enforcement. And, not least, the group recommended a reduction in the debt collection companies’ claims for costs.

All organizations need financing, and they need to know which types of financing are most appropriate for them. In addition to ordinary bank loans, there is a wide range of other options available, such as buyout financing, bond loans and convertible loans. Lenders face financing risks, and financial expenses are a major concern for borrowers.

We regularly assist organizations engaged in financing processes of various types, along with associated guarantee and security issues.

We also assist clients looking to refinance or restructure existing debt.

Organizations often want to use personal and other types of data in their possession to improve products and tailor products to a specific customer group.

In addition to providing traditional legal services in this area, PwC Legal also has consultants who are experts in data analysis. These work alongside our lawyers to provide comprehensive and unique services to our clients.

We often find that organizations are unsure of whether personal data collected for a specific purpose may be re-processed for the purpose of analysis.

These types of problems may often be solved by ensuring good procedures to mitigate privacy risks, such as anonymizing data sets as much as possible without compromising data quality and documenting that a sufficiently large data set has been used to safeguard the integrity of the anonymization process itself.

We have considerable experience in helping organizations to use personal data for analysis purposes in a suitable and legal manner.

In our experience, it is more cost-effective — and ensures a better-quality outcome — to bring in a consultant at an early stage in the process. In this way, clients can make sure relevant regulations are considered in the initial stages, thereby preventing issues from arising once the solution has already been developed.

Pension savings are becoming ever more important — a surge in the number of elderly people is looming and there will be fewer workers for each pensioner. Regulations and systems for pension savings, as well as who is doing the saving and on what terms, are changing. This is true for both the public and the private sectors.

We assist insurance companies, pension funds, banks, employers and other organizations with various pension-related issues.

Insurance is important to reduce risk and safeguard future living standards, and insurance matters often have very long-time horizons. It is essential for society, business and private individuals that we have good and secure insurance services. This industry is subject to regulations in many different areas.

We assist insurance companies and clients with, among other things, regulatory requirements, contracts, terms and conditions, restructuring, etc.

Finance industry regulations focus on different types of activities and services, such as the management of third-party investments, payment services or extending credit.

The regulations for each sector in this industry takes into account the risks and considerations that are relevant for the service or activity in question.

Financial stability and consumer protection are, however, a common theme in all types of activities and services. As a result, the mechanisms used by the authorities are similar, but applied differently.

Gaining an overview of how these regulations and mechanisms interact across sectors and country borders is not easy, but can yield considerable advantages. The European Capital Markets Union means that much has now been standardized across the EU — but not everything. The various national supervisory authorities may not necessarily impose the same requirements, and they may interpret regulations differently.

Tax regulations, for example, can be quite different, and this may have major implications. Whenever a new organization is starting out, major savings in terms of both time and money can be made by “perfecting the take-off” in terms of choosing the right licence, jurisdiction, organizational structure and staffing level.

Our comprehensive industry knowledge means that we can help you make better strategic choices, as our recommendations are based on both Norwegian and international considerations.

Distributed ledger (DL) is a technology with the potential to revolutionize how monetary transactions, loans, insurance certificates, personal identification, deeds, licences and documents are distributed and applied.

DL means that data is replicated, shared and synchronized in a network, where all members of the network have copies of a shared transaction summary. This means there is no single list of transactions — the number is infinite. Any attempt at change/falsification will therefore be reflected in all the other copies.

Some DL services have the same functionality as conventional financial instruments, in that they yield dividend, entail voting rights or grant a licence.

One example of such a service is Initial Coin Offering (ICO). Others, like Bitcoin, are intended to be used as a means of exchange or payment. There are other DL services with hybrid functionality, and these services evolve over time.

It is therefore not possible to apply a “one size fits all” approach to the regulation of DL services. In principle, the regulation of financial instruments should be technologically neutral. These regulations, however, were developed for conventional financial services and not services based on DL. Many are therefore uncertain whether, and, if so, how DL services are regulated. A lack of regulatory clarity exposes both investors and clients to risk.

PwC has in-depth knowledge of and experience from financial regulation and other regulatory issues related to DL technology.

We are happy to advise our clients on how they can reduce uncertainty and risk, and provide regulatory assistance, including in connection with registrations or licensing applications.

With the implementation of the European Capital Markets Union and harmonized regulation of equivalent services across the EU, cross-border operations and “passporting” has become the new standard in the finance industry.

Nevertheless, this development is still in its early stages. The European Commission’s objective is to enable various services, such as credit, savings, payment services, insurance and pensions, to be provided easily across national borders.

Much remains before this is a reality, and not just in terms of financial regulations. The direction of these developments, however, is clear, and this opens a lot of new opportunities for the future.

PwC has lawyers with specialist expertise from the finance industry in most European countries, as well as in most other countries with an established financial industry.

Our collaboration is global, on a shared technological platform, and we know each other quite well — which means we are efficient.

For most major regulatory changes, such as MiFID II, PSD2, etc., we also establish dedicated expertise networks, with regular meetings in person and an extensive exchange of experiences. This approach allows us to help our local clients with the backing of our full international breadth and expertise.

PwC’s Regulatory Radar was developed in response to the complex regulatory situation that has emerged in the finance industry in recent years:

• EU directives and regulations, usually in two “levels” and with varying degrees of detail 
• National laws and regulations 
• Guidelines and “Q&As” from EBA, ESMA, and EIOPA 
• National supervisory authority guidelines 
• National supervisory authority practices 
• A constant stream of ongoing regulatory amendments, hearings and evaluations, at national and EU level 
• Political activity that may affect these processes 

With our Regulatory Radar, you get access to a web-based, tailored service that monitors all the above processes for the finance industry at both the EU and national level.

The service includes notifications, updated timelines and a general description of regulations and the anticipated consequences for your type of organisation.

Contact Max Ekornrud Gudmundsen for more information 

The introduction of new regulations or amendments to existing regulations is something most players in the finance industry are accustomed to dealing with. Depending on the scope, however, such processes may be quite labour-intensive and require major changes within the organisation.

In our experience, the most important risk factors in these types of processes are:

• inadequate resources to go into detail and pick up on all the new changes
• insufficient overview of the work required, so that not all the departments or systems affected are identified
• the project swells to negatively affect or impede all other business development and “day-to-day operations”

Reg+ is our offer to clients executing implementation projects.

We combine a specially developed project method with industry expertise and specialists on the regulations in question, and make sure that the impact on the organisation is as minimal as it can be — while ensuring compliance with all regulatory requirements.

The finance industry is a highly regulated industry, and it is traditionally divided into segments based on the type of licence an organisation has or is pursuing.

Licence applications are submitted to the Financial Supervisory Authority of Norway, and finance regulations, particularly the Financial Institutions Act and the Securities Trading Act, with related regulations, stipulate the requirements an undertaking must satisfy in order for the Financial Supervisory Authority to grant a specific licence.

PwC has prepared and submitted a wide range of licence applications and can assist in the preparation and submission of licence applications in payment services, banking, securities, insurance, pension, loans, credit and financing.

PwC can also help your organisation clarify which, if any, types of licences your organisation needs, based on the types of activities you undertake and the services you provide. We also help with correspondence and clarifications with the Financial Supervisory Authority related to licensing obligations and licence applications.

Contact Stine Seljeseth Aase for more information

If your organisation is engaged in or planning an activity and you are uncertain if you are or will be subject to regulatory requirements, our Scanner can help.

Based on a discussion and/or your submitted description of the planned activity/service, we will perform a general assessment of the activity’s status under various sets of regulations.

We provide feedback in the form of an easy-to-understand “traffic light”-based report, where we point out

1. Any parts of the activity that are not permitted
2. Issues that are uncertain and need further examination 
3. The parts of the activity that pose no issue under relevant regulations. We also provide a general overview of the requirements that apply to these parts of the activity.

Contact Daniel Næsse for more information

Organisations engaged in or wishing to engage in activities related to the finance sector will need to communicate regularly with public authorities, especially the Financial Supervisory Authority of Norway.

PwC helps various organisations in the finance industry with their communication with public authorities, both in connection with licence applications, clarifications and questions to the Financial Supervisory Authority, and in cases where the Authority decides to conduct on-site or document inspections.

We can also submit anonymous enquiries related to the Financial Supervisory Authority’s practice or regulatory interpretations..

Contact Stine Seljeseth Aase for more information