Regulatory sandbox

The regulatory sandbox allows businesses to test innovative propositions in the market with real consumers.

The regulatory sandbox is now always open. This means you can submit your application at any point throughout the year.

 

The sandbox is for authorised firms, unauthorised firms that require authorisation, and technology businesses that are looking to deliver innovation in the UK financial services market.

The sandbox looks to provide firms with:

  • the ability to test products and services in a controlled environment
  • reduced time-to-market at potentially lower cost
  • support in identifying appropriate consumer protection safeguards to build into new products and services
  • better access to finance

We closely oversee the development and implementation of tests, for example by working with firms to agree bespoke consumer safeguards.

Sandbox tests are expected to have a clear objective (eg reducing costs to consumers) and to be conducted on a small scale. Firms will test their innovation for limited duration with a limited number of customers. 

Always open

Since it launched, the regulatory sandbox has operated on a cohort basis, which means firms could only apply during a specific window in the calendar year. 

While the cohort approach was appropriate for a testing environment, which served as a blueprint for regulators all over the world, the sandbox required changes to reflect its maturity and the lessons learned since its inception in 2016.

The Kalifa Review of UK FinTech recommended that the sandbox be enhanced to provide more value to firms. This included a specific recommendation that the sandbox be made available on a rolling basis, rather than through time-limited windows. 

In August 2021, the regulatory sandbox moved to always open, allowing firms to submit their applications throughout the year. 

By making this change, firms can now access our sandbox testing services at the right point in their development lifecycle, to maximise the benefits of live market testing for progressing their innovative models. 

Find out how to apply for the regulatory sandbox, including information about our eligibility criteria.  

Regulatory sandbox tools

The regulatory sandbox provides access to regulatory expertise and a set of tools to facilitate testing. The tools are not always needed and their value will depend on the nature of each business and their test.

Restricted authorisation

To conduct a regulated activity in the UK, a firm must be authorised or registered by us, unless certain exemptions apply. Successful firms will need to apply for the relevant authorisation or registration in order to test.

We have a tailored authorisation process for firms accepted into the sandbox. Any authorisation or registration will be restricted to allow firms to test only their ideas as agreed with us.

This should make it easier for firms to meet our requirements and reduce the cost and time to get the test up and running.

If you require a restricted authorisation you will have to pay an application fee.

Signposting  

We can assist in identifying existing rules or guidance that might be relevant to a firm and their proposed business model. This will not be tailored to the firm, but given the amount of guidance that we produce, many firms find it useful to be pointed towards information that is more directly relevant for them. 

Informal steers

We can provide informal steers on potential regulatory implications of an innovative product or business model that is at an early stage of development. 

Waivers or modifications to our rules

We may be able to waive or modify an unduly burdensome rule, for the purpose of the test. We are not able to waive national or international law.

No enforcement action letters

For cases where we can’t issue individual guidance or waivers but believe it’s justified in light of the particular circumstances and characteristics of the sandbox test, we can issue ‘no enforcement action’ letters.

As long as the firm deals with us openly, keeps to the agreed testing parameters and treats customers fairly, we accept that unexpected issues may arise and wouldn’t expect to take disciplinary action.

The letter would only apply for the duration of the sandbox test, only to our disciplinary action and would not limit any liabilities to consumers.

Individual guidance

If you are unclear on how our rules apply to your firm, we can explain how we would interpret the requirements in the context of your specific test.

Page updates

17/08/2021: Information added Signposting text added
02/08/2021: Information added regulatory sandbox is now always open