FCA UK issued an update on regulatory sandbox
The Financial Conduct Authority of UK (FCA UK) today provides an update on its regulatory sandbox and unveils the list of firms that were successful in their applications to begin testing in the second cohort of the sandbox.
The regulatory sandbox allows businesses to test innovative products, services, business models and delivery mechanisms in a live environment while ensuring that consumers are appropriately protected. It is part of Innovate, an initiative kicked off in 2014 to promote competition in the interest of consumers.
Christopher Woolard, Executive Director of Strategy and Competition at the FCA, said:
“The sandbox continues to grow in popularity and it is particularly encouraging that both the number of firms applying and accepted for testing has increased in cohort two. That means more innovative firms, trialling more innovative propositions to bring to the market. This is an important part of the FCA’s commitment to promoting innovation and competition in the markets we regulate.”
Cohort two
The FCA received 77 submissions for the second phase of the regulatory sandbox, more than applied for cohort one. 31 applications met the sandbox eligibility criteria and were accepted to develop towards testing. The current cohort consists of the 24 firms that are ready to begin testing shortly. Tests will be conducted on a short-term and small-scale basis and the FCA has worked with the sandbox firms to agree testing parameters, building in consumer safeguards. In addition to the firms below, seven firms were not ready to begin testing and may be part of cohort three.
The range of firms testing in the second cohort is diverse, covering a variety of geographies and sectors including wholesale, general insurance, payments, retail banking and retail lending. Accepted propositions from firms cover a range of ideas including distributed ledger technology based payment services and artificial intelligence software to observe client behaviour and better determine client preferences before financial advice is given.
In the sandbox’s first phase, the majority of firms were based in London with a small number from other parts of the UK. As the FCA looks to increase its regional engagement in emerging FinTech hubs, the proportion of regional firms is higher in this cohort.
To view the Sandbox cohort two firms, click HERE
Update on cohort one
In cohort one of the sandbox, 24 firms were accepted out of 69 applications and 18 firms had testing plans approved in October 2016. The six month testing window has now closed and firms are submitting final reports, which will be reviewed before the firms transition out of the sandbox.
The majority of tests have developed as planned towards meeting their objectives and the FCA currently expects most firms to take forward their propositions to market. The insight gained from the tests will feed into future work in this area.
Application window for sandbox cohort three
FCA is now accepting applications from firms to be part of our third sandbox phase. Firms have until 31 July 2017 to submit their applications. The eligibility criteria, application form and instructions on how to apply are available on the Regulatory Sandbox pages on the FCA website. The FCA would expect all accepted firms to be ready to begin testing from November 2017.
The FCA encourages applications from firms of all sizes. As seen by the firms accepted into the first and second cohorts, the sandbox is available to large firms, start-ups and everything in between.
Source: FCA – Financial Conduct Authority provides update on regulatory sandbox
