On 12 April 2016 the FCA published two documents and a speech by Christopher Woolard, FCA Director of Strategy and Competition, providing further clarity on the FCA’s progression with the regulatory sandbox. A regulatory sandbox is a ‘safe place’ in which businesses can test innovative products, services, business models and delivery mechanisms without immediately incurring all the normal regulatory consequences of engaging in the activity in question. The FCA’s original plans for the regulatory sandbox were published in November 2015.
In the speech delivered by Christopher Woolard on 11 April 2016 at the Innovate Finance Global Summit, he confirms that the FCA will run two cohorts for the first year, allowing room for both the FCA and the firms to mutually learn from the process. The FCA will ask firms wishing to partake in the regulatory sandbox to submit applications explaining their proposition and how it meets the sandbox eligibility criteria. The FCA, therefore, encourages firms to submit well developed testing plans, as the FCA will be selecting firms for the first cohorts with the “most doable” test plans.
The two documents published address the following:
- Sandbox eligibility criteria – This document sets out the criteria implemented by the FCA in establishing whether a firm will be eligible to take part in the regulatory sandbox. The criteria includes questions on whether a firm is intending to deliver ground-breaking innovation in the regulated market to benefit consumers and whether the firm is ready for testing.
- Default standards for sandbox testing parameters – This document sets out general standards and expectations regarding the duration, number of customers, customer selection and safeguards, disclosure, data and testing plans.
The FCA will start accepting applications from firms on 9 May 2016. The firms that are successful will then be able to test out their innovative ideas using the sandbox.