We are now open for applications to cohort 6 until 31 December 2019.
The regulatory sandbox allows businesses to test innovative propositions in the market with real consumers.
We provide a range of tools to sandbox firms to help facilitate their test. Tools are not always needed and their value will depend on the nature of each business and their test.
The sandbox is open to authorised firms, unauthorised firms that require authorisation and technology businesses that are looking to deliver innovation in the UK financial services market. All applications will be assessed against our eligibility criteria which are set out below.
We are particularly interested in receiving applications from firms with propositions that:
- make finance work for everyone – by addressing issues around access, exclusion and vulnerability
- support the UK in the move to a greener economy – by responding to the challenges posed by climate change
- use technology to overcome regulatory challenges – by helping regulated firms comply with their obligations
We have also identified 2 specific technology areas where we would like to see more innovation and testing. We welcome applications from firms using:
- federated learning and travelling algorithms
- complex scenario modelling and simulation
The application form includes space for you to explain how your proposition meets our eligibility criteria. The table below includes information on each criteria:
|Criteria||Key questions||Positive indicators||Negative indicators|
|In scope||Are you looking to deliver innovation that is either regulated business or supports regulated business in the UK financial services market?||
Innovation appears to be intended for the UK market
Innovation does not appear to be intended for use in the UK
|Genuine innovation||Is your innovation new or a significantly different offering in the marketplace?||
Desk research produces few or no comparable offerings already established on the market
Step-change in scale
There are numerous examples of similar offerings already established on the market
It looks like artificial product differentiation
|Consumer benefit||Does the innovation offer a good prospect of identifiable benefit to consumers (either directly or via heightened competition)?||
The innovation is likely to lead to a better deal for consumers directly or indirectly
You have identified any possible consumer risks and proposed mitigation
The innovation will promote effective competition
Likely detrimental impact on consumers, markets or the financial system
It looks designed to circumvent regulations
|Need for a sandbox||Do you have a genuine need to test the innovation in our sandbox? Applicants aren't required to need a sandbox tool to meet this criteria||
The innovation does not easily fit the existing regulatory framework, making it difficult or costly to get the innovation to market
You will benefit from using a sandbox tool to test in a live environment
You have no alternative means of engaging with the FCA or achieving the testing objective
The full authorisation process would be too costly/difficult for a short viability test
Live testing is not necessary to answer the question that you want answered (to achieve the testing objective)
You are able to undertake the test easily without the support of the FCA
A dedicated supervisor or our Direct Support team could answer the query
|Ready for testing||Are you ready to test the innovation in the real market with real consumers?||
You have a well-developed testing plan with clear objectives, parameters and success criteria
Some testing has been conducted to date
You have the resources to test in the sandbox
You have sufficient safeguards in place to protect consumers and is able to provide appropriate redress if required
Unclear objectives for testing and/or plans for testing are underdeveloped
Little to no testing has been done
You do not have the resources for the test
The proposed customer safeguards are inadequate and/or appropriate redress cannot be provided
What we have learned from previous applications
In October 2017 we published a regulatory sandbox lessons learned report which reflects on insights and lessons learned from testing since the regulatory sandbox launched in June 2016. Firms applying to the sandbox should consider the following points that we’ve learned from previous sandbox cohorts.
A number of the firms require a partner in order to test their proposition (e.g. a firm you can be an outsourced technology provider for).
If you need a partner, you must find and secure contractual agreements before testing.
We are not able to provide a partner if you need one.
Requirement to have a significant UK presence
If your test requires you to be authorised or registered by us, you would be required to have a certain level of staff presence and a head office located in the UK.
Many firms need a UK bank account to be able to carry out testing.
Regulated activities and restricted authorisation
If you require a restricted authorisation, you will need to submit a number of forms as part of your application.
We will guide you through the process of authorisation, however we recommend you read our authorisation pages to familiarise yourself with the process and the documentation that will be required.
Some key documents to read are:
- PERG 2.7 in our Handbook provides a broad outline of the activities the FCA regulates – you will need to work out which regulated activities you may be carrying out during your sandbox test
- our Threshold Conditions, which firms must meet to be authorised
- our guides to applying to be a payment institution and applying to be an electronic money institution (pay particular attention to the safeguarding requirements)
This restricted authorisation option is not available to firms looking for a banking license – contact us and Prudential Regulation Authority's joint New Bank Start-up Unit.
If you have any questions about the sandbox email [email protected] or call 020 7066 4488 and someone will be able to help you.