The FCA will finally launch its “regulatory sandbox” on 9th May as part of FCA's 'Project Innovate' that was first announced in 2014.
Project Innovate aims to foster competition and growth in financial services by supporting organisations that are developing new products and services that could genuinely benefit UK consumers.
The “regulatory sandbox” is being launched as a ‘safe space’ in which businesses can test innovative products, services, business models and delivery mechanisms without immediately incurring all the normal regulatory consequences of pilot activities.
For those existing authorised firms who want to test an innovative product or service that might normally sit outside the existing regulatory framework the FCA advises that they obtain more guidance and assistance from them on the rules before testing. This covers areas such as the granting of waivers or modifications to the rules and the issuance of enforcement action letters. For more detail please see [link: http://www.fca.org.uk/your-fca/documents/regulatory-sandbox]
The FCA has set up a list of eligibility criteria in summary cover 5 areas:
- The firm must be in scope, i.e. Is the firm looking to deliver innovation which supports regulated business in the UK financial services market?
- Is it a real innovation? i.e. ground breaking or constitutes a significantly different offering in the marketplace?
- Does it benefit consumers? A firm will be more likely to meet this standard if it identifies any possible consumer risks and proposes mitigation
- Genuine need for a sandbox. Does the business have a genuine need to test the innovation on real customers and in the FCA sandbox?
- Is the business ready to test their innovation in a live environment?
- Number of customers
- Customer selection
- Customer safeguards
- Testing plans
Enrolling in the programme
Application forms will be published on 9 May 2016 and applications can be made from 9 May 2016 to 8 July 2016. From 9 July 2016, the FCA will assess all applications. Applicants will be informed by mid-August whether their application has been successful. An additional application process for a second set of firms will have a deadline of mid-January 2017.