Set up two years ago by the FCA as a ‘safe space’ in which businesses can test innovative products, services, business models and delivery mechanisms in a real market, with real consumers, the idea has fired the imagination of regulatory bodies in other jurisdictions, leading to moves to develop a Global Financial Innovation Network and a global regulatory sandbox.

However, a survey of current and previous sandbox participants conducted by Deloitte and Innovate Finance found broad support for the FCA's ambitions, tempered by disappointment in the practical difficulties encountered during a complex and tortuous application process.

A majority of firms found the authorisation process daunting, including navigating and interpreting the FCA’s handbook. At this stage those start-ups who did not have previous exposure to financial services regulation struggled more than those who already knew the ropes - suggesting that start-ups should consider making appropriate investments in compliance and legal capabilities.

The testing stage too proved a challenge for many firms, with factors such as finding willing customers to test on, time constraints on testing alongside ‘business as usual’ cited as particularly tricky. Another challenge at this stage was the need for users to open business bank accounts, which many found time-consuming and a delaying factor.

The point of exit, the research suggests, is the least clear for many firms. Whilst transitioning out can take many forms depending on how the firm chooses to proceed, some firms had no clear ‘graduation day’ and/or ongoing exchanges with the sandbox team.