Your partner's license won't protect you

This week felt… balanced, and I bet you’ve had those weeks too, where things just hum along nicely.

I welcomed over 20 new subscribers to Unbilled Hours, my newsletter on growing a legal firm, and had several prospecting calls.

Nothing is closed yet - pricing was a sticking point - but the conversations were solid, and my pipeline’s looking healthy.

Maybe you’re in a similar groove, making steady progress with your fintech platform, racking up small wins that keep you moving forward.

The challenge for me has been adjusting to my new Substack rhythm. Juggling writing, prospecting, and client work is no joke, but it’s starting to click.

I’ve also noticed more people on LinkedIn trying to build their personal brands, and having been there, it’s cool to share what’s worked. It’s a calm season, and I’m learning to soak it in.

Calm keeps you focused, right? You’re probably finding that too, savoring those moments when things feel under control.

But let’s talk about something that can disrupt that calm. Especially in fintech: assuming your partner’s license covers you. It’s a trap that feels safe until regulators like RBI or SEBI come knocking.

Too many startups learn this the hard way, and I want to make sure you’re not one of them. Let’s dive into why this happens and how to protect your business.

The License Myth That Leaves You Exposed

Let’s say you’re running a fintech startup - maybe processing payments or onboarding investors. You sign a deal with a licensed partner, maybe a startup in Singapore, and launch your platform.

Users start flowing in, and you’re feeling good, thinking, “We’re covered. Our partner’s got the license.” It sounds bulletproof. You’re not the one jumping through regulatory hoops, so you focus on growth and marketing.

But then, a problem pops up. Maybe a compliance gap emerges - like incomplete KYC data - or a regulator questions your operations.

You point to your partner, saying, “They’ve got the license!” But the catch is: their license doesn’t automatically protect you.

What’s valid in Singapore might mean nothing in Mumbai under RBI or SEBI rules. Regulators don’t care who you partnered with - they care about what you’re doing, where, and under whose authority.

Without a contract that clearly defines your role, you’re in trouble. You handle onboarding, they hold the license. You touch user data, they manage compliance.

You market the platform, but they’re supposed to file reports. When things break down - say, a user’s data triggers a compliance probe - you’re left in the gray, facing fines or a suspended operation because you relied on their paperwork.

In India’s strict regulatory landscape, this can cost you big. Let’s fix it with three actionable steps.

Three Steps to Stay Protected

1. Define Your Role Clearly

Your contract should explicitly state what you do and don’t do:  

“The Platform serves only as a technology provider. The Partner is responsible for compliance, licensing, and regulatory filings per RBI/SEBI requirements.”

This clarity is your first defense. Assuming your partner’s license covers you leaves gaps that regulators can exploit.

By being clear that you’re just the tech, you’re ensuring they can’t pin their compliance duties on you.

This is critical because it protects you from fines or legal scrutiny if they slip up, keeping your business focused on what you do best.

2. Shift Liability with Indemnity

Add a clause like:  

"The Partner indemnifies [Your Company] for any losses from non-compliance with RBI/SEBI regulations.”

This makes your partner financially responsible if their compliance failures trigger costs.

In fintech, fines can hit hard, and without this, you could be stuck paying for their mistakes.

This clause shifts the burden to them, protecting your cash flow and reputation, so you don’t end up footing a six-figure bill for someone else’s error.

3. Plan for Worst-Case Scenarios

Include an exit trigger:  

“License suspension of the Partner constitutes grounds for immediate termination, without penalty.”

If your partner’s credentials are revoked, you need a quick way out. This clause lets you walk away before their mess becomes your crisis, protecting your operations from being tied to a failing partner.

It’s key to avoid being dragged into their regulatory fallout, which could halt your platform or scare off users.

Your Quick Checklist for License Safety

Here's a summary of everything that I just covered:

• Clear roles: State you’re not handling compliance.  

• Indemnity protection: Make partners liable for their failures.  

• Exit plan: Allow termination if their license fails.

With these in place, you are making sure that communication is your first priority.

Clarity Keeps You Safe

In fintech, assuming a partner’s got you covered is like building on borrowed time.

Maybe you’re planning to scale with new partners. Clear contracts ensure you’re not left holding the bag when regulators investigate.

It’s like the quiet progress you’re making - steady, consistent, real. Next time a partner says, “We’re licensed,” don’t just nod. Get it in writing.