The FCA has confirmed that its regulatory ‘sandbox’ will be launched on 9 May, expanding upon its existing Project Innovate. Further details will be revealed next Monday.
In its annual business plan, released this week, the FCA stated: “This will give firms which meet our eligibility criteria a safe space to test innovation without immediately having to meet all the normal regulatory requirements.
“They will be able to test new products, services, business models and delivery systems.
“Unauthorised firms will benefit from restricted authorisation for testing purposes, and all eligible firms will have the potential benefit of individual guidance, waivers and no enforcement action letters. We want more firms to embrace innovation.”
An FCA report said it is estimated that the UK’s FinTech sector generates about £20bn in revenue annually, with a total market of £3.6bn in ‘disruptive’ FinTech and half of the promising ‘disruptive’ FinTech start-ups in Europe are in the UK.
The FCA has recommended the industry should consider setting up a not-for-profit company to act as a sandbox ‘umbrella’.
The FCA report stated: “We wanted to find ways to reduce the time and potential cost of getting innovative ideas to market. We also wanted to work with innovators to build in consumer protection from the start.
“Consumer needs are constantly evolving and innovative solutions are required to meet them. Too often, however, firms have to spend considerable amounts of money bringing innovation to market, not least because they must meet regulatory requirements immediately. This acts as a brake on developing new services and products and limits competition.”
Tracey McDermott, acting chief executive of the FCA, said: “The impact of technology is one of the fastest-evolving of this year’s priority themes. In particular, the potential of technology to improve not only how products and services are designed, but also how they are distributed.
“We will foster new ways to help firms of all sizes develop novel ideas for market through our ‘regulatory sandbox’, which offers firms a safe space to test innovation, reducing the regulatory burden whilst achieving greater compliance.”
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