Gilbert said he had seen many products developed without early consideration of regulation that resulted in them falling foul of costly delays and even failure.

“Fintech entrepreneurs prefer to throw all of their energies into development and imagine getting regulatory authorisation is like sending off a passport application. 

“Often the regulator will require additional information and sometimes changes to a product or service before giving approval. 

“That can mean the process takes six months or more.”

Gilbert said these delays could be a disaster for fintech firms.

“Money is nearly always tight so delays in turning on the revenue tap can be fatal, leading to uncomfortable negotiations with funders and the risk of ceding competitive advantage. 

“Securing regulatory approval is one of the biggest hidden threats for start-up fintech firms – compliance cannot be treated as an afterthought.”

Gilbert defended the FCA, saying innovation added complexity to its job and some fintech entrepreneurs waited until they believed a product was 75% complete before applying for authorisation.

“In fairness, in our experience, the FCA is more than happy to speak to those in [the] quite early stages of developing fintech propositions to offer guidance and support on regulatory matters, but this message doesn’t always get through to start-ups.

“Naturally, there are costs associated with applying for FCA authorisation, but that expenditure can be limited by engaging with the FCA at the earliest opportunity.”

Gilbert concluded that it was more expensive for start-ups to have to spend additional time in development.

“These costs eat into seed capital and regularly force entrepreneurs to go to their backers for more cash.

“Some end up having to give away extra share capital, which can be a painful experience in itself, especially given that it may have been avoidable by engaging with the FCA earlier.

“At best, this delays the point at which a firm starts trading: at worst, a company’s backers will run out of patience and pull the plug so the product never sees the light of day.”