Firms have until 8 July to sign up with the Financial Conduct Authority (FCA) for the first wave of applications, which will provide unauthorised firms with the protection to test their ideas avoiding risk to consumers. Authorised businesses will be given guidance before testing ideas that do not easily fit into the regulatory framework.
Companies accepted onto the initiative will be given the freedom to experiment with their ideas without immediately incurring all the normal regulatory consequences, the FCA said.
Tracey McDermott, acting chief executive at the FCA said: “Supporting innovation is an essential part of our role in promoting competition in the interests of consumers.
“Our aspiration is that the sandbox not only enables innovative ideas to be tested and brought to market, but also helps to reduce the time and the cost of getting them there.”
The regulatory sandbox is part of the FCA’s Project Innovate, which launched in October 2014 to encourage disruptive innovation in financial services, while protecting consumers.
Successful unauthorised firms applying to take part in the testing space will be granted restricted authorisation, for the limited purpose of using the sandbox. Firms seeking a banking license will not have access to the tailored authorisation process and are encouraged to contact the FCA and Prudential Regulation Authority’s Bank Start-up Unit.
Speaking last month at the Innovate Finance Global Summit, the FCA’s director of strategy and competition, Christopher Woolard, said: “This is a bold and complex project for any regulator to undertake. As well as significant potential benefits, it comes with risks. In many ways, it won’t just be the firms that are learning in the sandbox, we will be too.”