The regulator says that the sandbox is a ‘safe space’ in which businesses can test innovative products, services, business models and delivery mechanisms while ensuring that consumers are appropriately protected.
The sandbox idea is part of its Project Innovate, an initiative kicked off in October 2014, to help encourage innovation in the interests of consumers and promote competition through “disruptive innovation”. The aim is that businesses will try out new product ideas thoroughly before launching them publicly. Firms have until 8 July 2016 to apply to be in the first cohort of the sandbox.
The sandbox will offer a range of options for eligible firms: a tailored authorisation process (restricted authorisation) for new firms in the testing phase; individual guidance for firms testing ideas that do not easily fit into the existing regulatory framework and in some cases waivers or no enforcement action letters.
The FCA says the sandbox may be useful for unauthorised firms that need to become authorised before being able to test their innovation in a live environment.
For firms which are already authorised, the FCA says the sandbox may be useful for firms looking for clarity around applicable rules before testing an idea that does not easily fit into the existing regulatory framework.
Technology businesses that want to provide services to FCA regulated firms (for example, through outsourcing agreements) can also apply for the sandbox and the tools if they need clarity around rules before testing.
Tracey McDermott, acting chief executive at the FCA said: “Supporting innovation is an essential part of our role in promoting competition in the interests of consumers. Our aspiration is that the sandbox not only enables innovative ideas to be tested and brought to market, but also helps to reduce the time and the cost of getting them there.”