FCA Launches 'Sandbox' To Support Innovation During Crisis

By Najiyya Budaly
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Law360, London (October 5, 2020, 3:34 PM BST) -- Finance companies that are developing innovative solutions to help businesses and consumers during the coronavirus crisis can apply for support and regulation through the Financial Conduct Authority's "digital sandbox," the regulator said on Monday.

The FCA said that, from Monday, innovative firms can apply to be part of its regulatory sandbox. The City watchdog said that it is encouraging companies that are looking to develop products during the pandemic to help prevent scams, support vulnerable consumers and improve access to finance for small and midsized enterprises to sign up for the program.

The digital sandbox pilot is designed to support innovation at an early stage, allowing companies exploring areas such as use big data, artificial intelligence and other technological advances to get their ideas to the market more quickly. 

"The FCA is a strong believer in the positive power of innovation," Nick Cook, the FCA's director of innovation, said on Monday. "Today we are strengthening the range and scale of support we are providing to innovative firms to deal with the challenges raised by the pandemic."

Regulatory sandboxes are "safe spaces" in which companies can test out new technology and tools without onerous oversight.

The FCA's latest invitation to play in the sandbox will allow businesses to test new ideas for digital financial services on a small scale with help from the regulator. The watchdog said it will provide data to help innovators test their ideas and offer a collaborative program where firms can work together on new projects.

The program will also have a so-called observation deck, where entrepreneurs can watch their peers test out new products.

The pilot is open to FCA-authorized companies, as well as those that are not authorized, such as technology businesses that hope to provide products to the domestic financial services market, the watchdog said.

Insurers have also embraced the idea of the sandbox. Lloyd's of London runs an incubator program so that start-up companies can test out innovative ideas.

--Additional reporting by Lucia Osborne-Crowley. Editing by Ed Harris.

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