Out-Law News | 06 Aug 2021 | 2:18 pm | 1 min. read
The FCA announced its regulatory sandbox in 2015, with the first businesses benefiting from the scheme in 2016. The initiative enables businesses to test innovative products, services, business models and mechanisms of delivery under a tailored regulatory framework.
Until recently, the FCA’s sandbox scheme operated in cohorts whereby businesses were supported in their testing during set periods of the year only. However, that approach changed on 2 August meaning businesses can now apply to participate in the sandbox at any time.
Andrew Barber, a financial services expert at Pinsent Masons, the law firm behind Out-Law, said: “As the UK looks to continue to attract fintech businesses and remain a market leader, a cohort basis for the regulatory sandbox was not sustainable. It is good to see that the FCA has acted quickly on the recommendations within the Kalifa review of UK fintech and provided businesses with the opportunity to develop and test products year-round.”
In its new guide, the FCA explained what information it expects sandbox applicants to provide about their business ideas to support their application.
The FCA said businesses should provide a summary of their proposition and its stage of development and indicate what the main technology used to enable their innovation is, and the FCA has provided points to consider to help businesses explain how their idea is “new or a significantly different offering in the marketplace” and benefits consumers.
According to the guide, businesses should also be prepared to explain why they need to test their innovation in the FCA’s regulatory sandbox and what kind of support they hope to receive from the regulator. The FCA also expects businesses to develop and outline a testing plan – including the anticipated outcome, the timeline for testing and “key milestones”. Businesses also need to be transparent about their “quantitative and qualitative measures of success”.
The regulator also expects prospective sandbox participants to summarise “the key risks” arising from their proposition and planned testing to both consumers and their business, as well as the “safeguards in place to mitigate these”. Businesses are also expected to provide details about their exit plans from testing.
15 Jul 2021
12 Apr 2016