Fabio Dias: an Update on our Expansion Journey

As we move through October 2024, I am pleased to report that Stalwart Holdings is progressing smoothly through the Financial Conduct Authority’s (FCA) authorisation process, aimed at extending our regulatory licence to cover robo-advisory services. Since beginning this journey in early September, we have engaged extensively with the FCA, and the dedicated case handler assigned to us has shown both a clear understanding of our objectives and a firm commitment to ensuring that our operations meet the high standards expected of financial services providers in the UK.

The authorisation process itself is robust, as expected from one of the most respected financial regulatory bodies in the world. The FCA has a well-defined authorisation framework, particularly when it comes to new fintech offerings like robo-advisory. For Stalwart Holdings, the process involves several key steps, from initial submission and detailed documentation review to a thorough risk and compliance assessment of the technology that will power our robo-advisory service. At each stage, the FCA has posed crucial questions about our approach, probing deeply into how our systems work to ensure that customer interests remain at the forefront of our service.

Our case handler has provided valuable insight, especially on how our algorithm is tested and validated. It’s been encouraging to witness the FCA’s focus on consumer protection and service integrity, aligning perfectly with Stalwart’s mission of providing reliable, accessible financial advice to a broader audience. Specifically, they have raised insightful queries about how we monitor the accuracy of the advice produced by the algorithm. It’s clear that the FCA recognises the importance of a robust testing regime and ongoing validation to ensure that our automated advisory service performs as expected and adjusts for market changes.

Additionally, a significant focus has been placed on managing potential conflicts of interest between our advice unit and our issuance programme of Exchange-Traded Notes. This attention to the structural aspects of our business underscores the FCA’s commitment to maintaining a market where client interests remain central. The FCA’s commitment to transparency and thoroughness in the authorisation process reflects the very values we uphold at Stalwart Holdings. They’ve raised important questions, and we’re eager to provide full clarity on each.

The FCA authorisation process can be demanding, but its rigour ensures that only those firms which meet the highest standards of conduct, transparency, and security are granted permissions. Once an application is submitted, the FCA begins with an initial review of submitted materials and a preliminary assessment of the firm’s readiness and suitability for the requested permissions. In the subsequent stage, as is currently the case for Stalwart, the assigned case handler performs a more detailed analysis, seeking clarifications and additional documents as needed. They evaluate factors such as the firm’s governance structure, financial stability, operational resilience, and the robustness of controls around financial advice. For us, the most intricate part of this review is proving the reliability of our robo-advisory algorithm and providing evidence that it functions to deliver well-rounded, personalised advice.

A final stage in the authorisation process will involve a high-level review and a recommendation from the case handler. Provided that any remaining queries are answered satisfactorily, we expect to receive an outcome within the next few months. Reflecting on the process so far, I would say, “It’s both demanding and reassuring. We feel that each question raised by the FCA is another step toward creating a well-regulated, trusted service for our clients.”

Luiz Loyola, our non-executive director, has been an invaluable source of guidance to Stalwart Holdings’ board as we navigate the expansion of our regulatory licence into robo-advisory services. His expertise in financial services and deep understanding of regulatory landscapes have provided a steady hand in discussions around both compliance and innovation. Luiz has not only emphasized the importance of aligning our strategic goals with the FCA’s expectations but also encouraged a proactive approach to transparency and accountability in our interactions with the regulator. His insights have ensured that the board maintains a clear, strategic vision while also addressing the operational nuances required to meet stringent regulatory standards.

In addition to his regulatory insight, Luiz has helped the board stay focused on the broader impact of our new robo-advisory services on Stalwart Holdings’ long-term growth. He has been instrumental in shaping our approach to risk management, particularly in managing potential conflicts of interest between our advice and investment management units. Luiz’s guidance has been essential in ensuring that we have the right structures and processes in place to mitigate any perceived or real conflicts, underscoring our commitment to putting clients’ interests first. His leadership has strengthened the board’s confidence in pursuing this new direction, fostering a culture that values both innovation and compliance as foundational elements of our strategy.

As the process continues, Stalwart Holdings welcomes the FCA’s dedication to ensuring that our robo-advisory service will operate with full integrity, serving our clients with reliable, compliant, and high-quality financial advice. We believe that meeting these rigorous standards will ultimately strengthen our relationship with both the FCA and our clients, and we look forward to continuing this collaborative process as we approach final approval.