FCA Provides Update On Regulatory Sandbox

The UK Financial Conduct Authority (FCA) has revealed which companies will begin testing their applications in the second cohort of its regulatory sandbox. The initiative, which started in 2014, seeks to encourage competition in the UK financial service sector by allowing businesses to test services, products, business models, and delivery mechanisms. According to the FCA, 77 firms applied but only 31 were approved for cohort two. This is a larger ratio than in the first cohort which, having concluded in October 2016, had a total of 69 applicants and 24 approvals. Christopher Woolard, Executive Director of Strategy and Competition at the FCA, stated that this is the result of the initiative attracting increased attention.

“The sandbox continues to grow in popularity and it is particularly encouraging that both the number of firms applying and accepted for testing has increased in cohort two. That means more innovative firms, trialling more innovative propositions to bring to the market. This is an important part of the FCA’s commitment to promoting innovation and competition in the markets we regulate.”

According to the FCA, the second cohort has increased its regional engagement due to a higher percentage of regional firms being approved from emerging FinTech hubs for cohort two. Furthermore, the FCA revealed it has experienced more diversity with this cohort, as more firms were approved from multiple sectors such as wholesale, general insurance, payments, and retail banking and lending. Of the 31 approved, nine companies are actively using blockchain or distributed ledger technology (DLT) for their business purposes.

The FCA is currently accepting applications for cohort three until July 31, 2017. All interested companies, whether startups or large firms, are encouraged to submit the FCA’s regulatory sandbox application form.