The Financial Conduct Authority has opened its regulatory sandbox to UK firms, providing a ‘safe space’ in which businesses can test innovative products, services and business models
Part of the FCA's Project Innovate - an initiative kicked off in October 2014 to promote competition through disruptive innovation - the sandbox will offer a tailored authorisation process for new firms in the testing phase, alongside individual guidance for firms testing ideas that do not easily fit into the existing regulatory framework.
Tracey McDermott, acting chief executive at the watchdog says: “Our aspiration is that the sandbox not only enables innovative ideas to be tested and brought to market, but also helps to reduce the time and the cost of getting them there".
Firms have until 8 July 2016 to apply to be in the first cohort of the sandbox.
Todd Latham, CMO of Currency Cloud, welcomes the announcement: "Treading the line between keeping customers safe and encouraging financial innovation is a constant battle for regulators and we may find the sandbox goes through a number of iterations before reaching a model that produces real benefits to the industry. In the UK we have one of the most dynamic financial regulatory systems in the world; given the right support, this scheme could become a flagship model that guides regulation on a global scale."
Other regulatory bodies will be watching the results with interest. Just last week, Australia's Asic outlined plans to create its own version of the sandbox for unlicensed firms to run early stage tests and trials of their services.