In a publication from 10 November 2015, the Financial Conduct Authority (“FCA”) has announced its plans for implementing a ‘regulatory sandbox’ allowing businesses to test out new and innovative financial products, services or business models without incurring all the normal regulatory consequences of engaging in those activities. This publication marks the first anniversary of the FCA’s Project Innovate, an FCA initiative developed to foster competition and growth in financial services by supporting both small and large businesses that are developing new products and services. In its first year, Project Innovate has helped over 175 innovative businesses.
By introducing the regulatory sandbox the FCA aims to deliver a number of benefits to both innovators and to the regulator itself. Such benefits include reducing the time it takes for innovative ideas to come to market and ensuring that appropriate consumer protection safeguards are built in to new and innovative products. Moreover, the sandbox will allow a smoother and more tailored authorisation process for firms introducing innovative products and services, which will allow firms to test their products and services in a regulatory light, prior to authorisation.
The FCA intends to open the sandbox unit to proposals from firms for testing in spring 2016 and will be engaging with interested parties over the course of the next few months to finalise the design of how the sandbox will operate. Firms will be able to submit their views and opinions on the sandbox at a sandbox event, which will be held by the FCA in December 2015. In addition, firms who wish to provide input into the development of the sandbox unit can send it to sandbox@fca.org.uk.
Should you require any further advice or information on the above, Cleveland & Co, your external in-house counsel, are here to help.
