The Financial Conduct Authority’s (FCA) has issued a progress report on the regulatory sandbox, part of Project Innovate. The sandbox’s latest findings and objective represent an opportunity for businesses to test innovative products, services, business models, and delivery mechanisms in the real market, with real consumers.
Following its instalment in 2016, the group has succeeded in allowing venues to explore new opportunities and business models, all with requisite safeguards in place. Presently the sandbox supports fifty firms from a group of 146 applications received across the first two cohorts.
The report outlines the sandbox’s overall impact on the market, including the adoption of new technologies, increased access, and improved experiences for vulnerable consumers. Finally, the report focuses on a series of lessons learnt from individual assessments that have been conducted as part of the sandbox.
The sandbox initiative initially took effect from June 2016 when the group first opened for applications. The report presents a comprehensive snapshot for businesses, separated on a cohort basis with two six-month test periods per year. To test the sandbox, firms must submit an application setting out how they meet our eligibility criteria for testing.
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Overall, the initiative has proven highly successful in terms of oversight and analysis. Sandbox firms are assigned a dedicated case officer who supports the design and implementation of the test. This close contact helps allow case officers to assist firms in understanding how their innovative business models fit within the regulatory framework.
The primary goal of the sandbox seems to have been realized in part: i.e. reducing the time and cost of getting innovative ideas to market. According to the report, over 75 percent of firms accepted into the first cohort have successfully completed testing. Moreover, roughly 90 percent of firms that completed testing in the first cohort are continuing toward a wider market launch following their test.
Of note, the majority of firms issued with restricted authorization for their test have gone on to secure full authorization following test completion. Meanwhile, 77 percent of firms accepted into the second cohort have progressed toward testing. Moving forward, the FCA anticipates that a similar proportion of the second cohort will take these propositions to market.
The environment has proven conducive for success for several reasons. Working closely with the regulator has given many of the participating firms the opportunity to develop their business models with consumers in mind, while also mitigating risks.
This was accomplished via the implementation of appropriate safeguards to prevent any harm or abuse from occurring. A full analysis is outlined in greater detail in the sandbox progress report, which can be accessed by the following link.