The regulatory sandbox allows businesses to test innovative products, services, business models and delivery mechanisms in the real market, with real consumers.
The sandbox is a supervised space, open to both authorised and unauthorised firms, that provides firms with:
- reduced time-to-market at potentially lower cost
- appropriate consumer protection safeguards built in to new products and services better access to finance
The sandbox offers tools such as restricted authorisation, individual guidance, waivers and no enforcement action letters.
FCA closely oversee trials using a customised regulatory environment for each pilot – including safeguards for financial consumers.
Sandbox tests are expected to have a clear objective (eg reducing costs to consumers) and to be conducted small scale, so firms will test their innovation for limited duration with a limited number of customers.
Financial Conduct Authority
Who the sandbox is for:
Businesses seeking authorisation - The sandbox may be useful for firms that need to become authorised before testing their innovation in a live environment.
Authorised businesses - The sandbox may be useful for authorised firms looking for clarity about rules before testing an idea that doesn’t easily fit into the existing regulatory framework.
Technology businesses supporting financial services firms - Technology businesses that want to provide services to our regulated firms (eg through outsourcing agreements) can also apply for the sandbox if they need clarity about rules before testing.
FCA is accepting applications for regulatory sandbox cohort 3 until 31 July 2017.
Regulatory sandbox - cohort 1
FCA received 69 applications for cohort 1 from a diverse range of sectors, locations and sizes, before the application window closed on 8 July 2016.
24 applications were accepted, and 18 firms tested as part of cohort 1.
Regulatory sandbox - cohort 2
FCA received 77 applications for regulatory sandbox cohort 2 from a diverse range of sectors, locations and sizes, before the application window closed on 19 January 2017.
There were 31 applications that met the sandbox eligibility criteria and were accepted to develop towards testing. Seven firms were not ready to begin testing and may be part of cohort 3.
Cohort 2 therefore consists of 24 firms that are ready to begin testing shortly.