The regulatory sandbox allows businesses to test innovative products, services, business models and delivery mechanisms in the real market, with real consumers.
The sandbox is a supervised space, open to both authorised and unauthorised firms, that provides firms with:
- reduced time-to-market at potentially lower cost
- appropriate consumer protection safeguards built in to new products and services
- better access to finance
The sandbox offers tools such as restricted authorisation, individual guidance, waivers and no enforcement action letters.
We closely oversee trials using a customised regulatory environment for each pilot – including safeguards for financial consumers.
Sandbox tests are expected to have a clear objective (eg reducing costs to consumers) and to be conducted small scale, so firms will test their innovation for limited duration with a limited number of customers.
Sandbox cohort 3: the application window for sandbox cohort 3 is now closed.
Sandbox cohort 2: the firms accepted into sandbox cohort 2 were announced on 15 June 2017.
Who the sandbox is for
Businesses seeking authorisation
The sandbox may be useful for firms that need to become authorised before testing their innovation in a live environment.
The sandbox may be useful for authorised firms looking for clarity about rules before testing an idea that doesn’t easily fit into the existing regulatory framework.
Technology businesses supporting financial services firms
Technology businesses that want to provide services to our regulated firms (eg through outsourcing agreements) can also apply for the sandbox if they need clarity about rules before testing.
We can provide a number of tools to authorised and unauthorised firms, if required.
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.
If you’re unclear how our rules apply to your firm, we can explain how we would interpret the requirements in the context of your specific test.
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 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.
Apply for Regulatory Sandbox
The application window for cohort 4 will open in early December.
If you have any questions about the sandbox, email [email protected] or call 020 7066 4488 and someone will be able to help you.