The Financial Conduct Authority’s Regulatory Sandbox, launched in 2016,  provides a testing environment for innovative products and services in the real market with real customers. Its successful model has now been replicated across the globe, including Africa, East Asia and the Pacific regions.

In August 2021 the programme moved from a cohort to an always open model allowing firms to submit applications throughout the year. Under this new model 13 firms have been accepted onto the programme, the vast majority from the retail investment and retail lending sectors. Innovation is dominated by data and technology infrastructure with firms using AI/machine learning, distributed ledger/blockchain technology, open banking, application programming interface, digital ID and predictive analytics. 5 firms that have been approved for the Regulatory Sandbox will also participate in FCA’s second Green FinTech Challenge to support the development and live market testing of new products and services that will aid the transition to a net zero economy. 

Following the success of its first Digital Sandbox pilot, the FCA launched a second pilot in 2021 focused on the testing and development of new products and services in the disclosure, environmental and social and governance data arenas. Twelve companies were accepted onto the pilot from 40 applications. All participants reported a significant impact on innovation acceleration, citing the value of networking and collaboration, and access to quality mentors and advisers.

Over the course of the second pilot the number of participants actively engaging with mentors rose from 50 to 100 percent and the proportion engaging with investors and investment advisers increased from 30 to 73 percent. External evaluation found that the pilot was pioneering in bridging the gap between FinTech and sustainability. The FCA has now committed to establishing a permanent operating model for digital sandbox. 

The Global Financial Innovation Network (GFIN), launched in 2019, is chaired by the FCA and brings together over 70 international organisations committed to supporting financial innovation in the interests of consumers. Members include the Australian Securities and Investments Commission, the USA’s Consumer Financial Protection Bureau and Hong Kong Securities and Futures Commission. Building on the model developed by the FCA Sandbox it has developed a cross-border testing environment for scaleups.

FCA Regulatory Sandbox [2022] website