Understand services rules and regulations

How to understand regulations around supplying a service

View transcript for Episode 13 - Regulations around supplying a service recording
A service regulation is a law or restriction which applies to you as a service provider in a foreign market. You need to be aware of and know how to deal with these regulations otherwise it may make it more challenging to supply your services in new markets. Let’s explore some of the more common types of service regulations.

Your service may be subject to market access restrictions in some places. For example, if you supply financial services, there may be a restriction on the number of banking licenses you're entitled to. And you may need to apply to a national regulatory body to get permission to use them.

Regulatory requirements are generally created to protect a local market from crimes like fraud, or threats to the local economy. For example, in some markets if you’re a recruitment professional, regulations state that you need to use a local partner. As well as this, you need to consider whether your chosen market requires additional professional or technical accreditation on top of what you already possess.

Your chosen market may have restrictions on movement of people. Your staff will likely require travel or residence documents such as visas and work permits, and these could be time limited. There can also be restrictions on the ratio of UK staff to local staff. So it’s important to do your research before you commit, to ensure it’s financially and logistically viable.

Ignoring service regulations can result in fines and damage brand reputation. So start your research with gov.uk and the websites of appropriate regulatory bodies in your chosen market

What you’ll learn

  • what service regulations are
  • the main types of service regulations
  • the impact they can have on your business

What is a service regulation?

This is a law or restriction which applies to you as a service provider operating in a foreign market. Service regulations can act as non-tariff barriers to cross border trade. They may make it more difficult for you to supply your services in new markets, especially if you’re unaware of the rules – or unprepared for what's needed.

Common types of service regulations

The 3 main types of service regulations you could face are:

  1. Market access restrictions

    Your ability to sell your service may be restricted in certain markets.

    For example, if you supply financial services there may be restrictions on the number of banking licenses you’re entitled to in a country – and you may need to apply to a national regulatory body to get permission to use these.

  2. Regulatory requirements

    These are generally created by local regulatory authorities to protect a country or market from crimes such as fraud, or threats to the domestic economy. They can apply to a broad range of sectors, such as education, legal, financial and recruitment services.

    For example, if you’re a UK recruitment professional working in Switzerland, regulations compel you to use a local partner – or set up a company with a physical office, run by a Swiss national.

    You’ll also need to think about the professional or technical accreditation or approvals your UK-based staff will need to operate overseas. You may not be allowed to operate in certain service sectors unless you hold qualifications which are accredited by the appropriate authority in your target market.

  3. Restrictions on movements of people

    Your staff will need travel or residence documents, including visas and work permits if required.

    For example, you may have to apply for a business visa. This may only last for a set period of time, such as 90 days, and would usually have to be used within a strict time period. For example, 6 months.

    You may also find there are restrictions on the proportion of foreign nationals who can work in the local market. For example, some countries in South East Asia require all businesses working in their country to set up a local office, with a set proportion of local staff.

Assessing impacts on your business

If you ignore service regulations you can risk heavy fines and harm your brand reputation. In a global economy this could be severely damaging to your customers trust in your business.

So, it's crucial to be aware of local laws and regulations in a country, to help you assess the time and resources needed to comply with them and manage any risks involved.

You can research online, using sources such as gov.uk and the websites of the appropriate regulatory bodies in each market. For example, you can see the latest guidance around providing services to EEA and EFTA countries.

But you should speak with experts such as local bar associations and financial regulators before making any major business decisions. Your local international trade team can help you to identify contacts in these organisations.

When it comes to understanding regulations around a service, the old saying is research, research, research. The more information you get, the more in control you are of the costs and the effort expended in getting your service overseas. And therefore, you can work out what your profit is going to be and if it’s worthwhile entering the market.

International trade adviser

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