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One year on: the FCA’s regulatory sandbox
A year on from launching its regulatory sandbox, which was established to support the FCA’s objective of promoting effective competition in the interests of consumers, the FCA has released a report of its progress. The sandbox, which enables firms to test innovative products, services or business models in a live user environment, while ensuring that appropriate protections are in place, opened for applications in June 2016. Since then, the FCA has received 146 sandbox applications; of these 41 progressed to testing.
The report sets out the sandbox’s overall impact on the market, including the adoption of new technologies, increasing access and improving experiences for vulnerable consumers, as well as lessons learnt from individual tests that have been, or are being, conducted as part of the sandbox.
Christopher Woolard, Executive Director of Strategy and Competition at the FCA, said: “The FCA’s Regulatory Sandbox has been a first for regulators worldwide and we are pleased it has met a genuine demand from innovators. We have seen tests across the full range of sectors that we regulate and I’m pleased that the majority of firms that have tested products in the sandbox have gone on to take their innovation to market.”
Findings set out in the report show that benefits include reducing the time and cost for firms of getting innovative ideas to market. Around 90% of firms that completed testing in the first cohort have progressed towards a wider market launch, and at least 40% of firms which tested in the first cohort received investment either during or following their tests.
However, although the first year of operation gives an early indication that the sandbox has been successful in meeting its overall objectives, a close eye will be kept on the initiative in order to assess its overall impact. The FCA will use the insights outlined in the report to inform future sandbox developments and will continue to feed them into its broader regulatory work, including policymaking and supervisory activities. “It is important that we continue to evaluate the success of our interventions so that we can identify areas where improvements can be made to help both firms testing and ultimately the consumers they are serving,” says Woolard.