Innovate Finance Global Summit: FCA announces Sandbox details

The FCA's Christopher Woolard has announced more details of how the much-heralded Regulatory Sandbox will work. The Sandbox, which will be a testing space for new innovator firms, opens on 9 May and will offer:

• a tailored authorisation process
• individual guidance on the interpretation of rules
• waivers of rules, where the FCA is able to be flexible within the constraints of EU law, for example
• No Enforcement Action Letters, enabling firms to explore testing without fear of disciplinary action in rare instances where firms are entering completely new regulatory territory and the FCA is unable to say how they should approach the rules.

Mr Woolard advised that the Sandbox would:

• only deal with firms whose ideas will have a consumer benefit
• agree testing parameters and safeguards upfront and on a firm-by-firm basis
• require firms to have a clear exit strategy for customers for after the testing phase
• would engage with two cohorts of firms each year.

Mr Woolard also announced that the FCA would be welcoming proposals for industry-led sandboxes to operate alongside the FCA's. The announcements were well-received by the audience at the Innovate Finance Global Summit, where opinion seemed unanimous that the UK's regulator is the world leader in its approach to fintech. However, there were reservations from EY's Imran Gulamhuseinwala, whose team authored the EY report on London's fintech ecosystem. He raised concerns about whether a progressive approach has been adopted across the FCA, beyond its Project Innovate team, and whether the regulator has the resources it needs to provide the regulatory solutions it plans for fintech firms.