How to prepare a sandbox application

If you want to apply to be part of the regulatory sandbox you should understand how your proposal meets our eligibility criteria and read about what we’ve learned from previous sandbox cohorts.

Eligibility criteria

In the Regulatory Sandbox application form you have to explain your proposition and how it meets our eligibility 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 ground-breaking 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 consumer directly or indirectly

The business has 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? Meeting this criteria does not require use of one of the formal Sandbox tools.

The innovation does not easily fit the existing regulatory framework, making it difficult or costly to get the innovation to market

There is a clear need for a sandbox tool to test in a live environment

The business has 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 the firm wants answered (to achieve the testing objective)

The firm is 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

The firm has the resources to test in the sandbox

The firm has 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

The firm does not have the resources for the test

The proposed customer safeguards are inadequate and/or appropriate redress cannot be provided by the firm

 

What we’ve 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.

Ready for testing

Accurately demonstrating your readiness for testing is a particularly important part of your application.

If we don’t think your firm is ready to test or has considered the points outlined in the matrix above, then your application is unlikely to be successful.

We are particularly interested in:

  • the stage of development your idea is in and whether it can be tested in a live environment (including if you have done any functional testing)
  • your specific testing objectives and testing plan
  • the major dependencies for you to begin testing and how you intend to fulfil these (eg securing contractual agreement with a partner, securing a UK bank account, finalising development of your product)

Read our default standards for sandbox testing before you apply.

Securing partners

A number of the firms require a partner in order to test their proposition (eg 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.

Bank accounts

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:

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.

Apply for Regulatory Sandbox

The application window for cohort 4 of the regulatory sandbox is open until 31st January 2018. Completed application forms for cohort 4 should be submitted to [email protected] by 31st January 2018.

Contact us

If you have any questions about the sandbox or want to discuss it before you apply, email [email protected] or call 020 7066 4488 and someone will be able to help you.