The Financial Conduct Authority (FCA) is to implement a ‘regulatory sandbox’ where business can test out new financial products and services without incurring the normal regulatory consequences.
Under the plans being considered, firms that do not yet have FCA authorisation will be able to make use of the sandbox. It suggested that these firms will be able to use a tailored authorisation process that will only allow for testing products and services.
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For authorised firms, the FCA proposed using the sandbox tools to give confidence that enforcement action will not be taken at a later date in relation to testing activities.
In order to protect consumers and market integrity, the FCA said it would work and agree on the appropriate safeguards with firms on a case-by-case basis.
The regulator also suggested a number of additional solutions open to the industry acting collectively, such as establishing a virtual testing environment and setting up an authorised umbrella company that allows innovative businesses to act as its ‘appointed representatives’ for the duration of the trial. It will now start engaging with stakeholders to explore these options further.
The FCA was initially asked to investigate the feasibility and practicalities of developing such a sandbox for financial services by the Government’s Treasury Department, following recommendations by the Government Office for Science.
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By GlobalDataIt plans to open the sandbox unit to proposals from firms for testing in spring 2016. It will also hold a ‘sandbox event’ in December 2015, for firms with views on the sandbox.
