In a speech on 22 September 2016 Christopher Woolard, FCA Director of Strategy and Competition, confirmed that interest in the FCA’s regulatory sandbox has been high and total applications have far exceeded the FCA’s expectations.
The sandbox provides a safe space for firms operating in the fintech space to test out ideas and is the first of its kind anywhere in the world. It opened for applications on 9 May 2016 and Mr Woolard reported that 69 applications were received, of which 24 were accepted to develop towards testing. The confirmed range of sectors is also very encouraging with retail banking, insurance, advice and IPO all represented.
Applicants were not purely domestic with international jurisdictions such as Singapore, Denmark, USA and Canada also represented.
As well as attracting applicants from other jurisdictions, the sandbox has also been closely monitored by international regulators. Sandbox initiatives have subsequently been announced by regulators in jurisdictions including Australia and Hong Kong.
Also this week a bill was introduced to the House in the US seeking to mirror the FCA sandbox. The stated aim of the bill was to keep the US from losing fintech companies to the UK purely because US regulation is not keeping pace.
The FCA clearly welcomes this imitation and says it is keen share its knowledge with its peers. Its active international strategy is demonstrated by signed agreements with regulators in Australia, Singapore and the Republic of Korea.
Credit to FCA
The FCA should be applauded for positioning itself on the forefront of fintech regulation, particularly given the cautious reception the sandbox received from many at launch. The competitive advantage the sandbox provides could be invaluable to the UK in retaining its leading position in global fintech, particularly whilst the uncertainty of Brexit remains.