FCA reveals second cohort of successful sandbox firms

"The sandbox continues to grow in popularity and it is particularly encouraging that both the number of firms applying and accepted for testing has increased in cohort two."

The regulatory sandbox allows businesses to test innovative products, services, business models and delivery mechanisms in a live environment while ensuring that consumers are protected.

The FCA received 77 submissions for the second phase of the regulatory sandbox, more than applied for cohort one. 31 applications met the sandbox eligibility criteria and were accepted to develop towards testing. The current cohort consists of the 24 firms that are ready to begin testing shortly.

The FCA says the range of firms testing in the second cohort is diverse, covering a variety of geographies and sectors including wholesale, general insurance, payments, retail banking and retail lending.

The 24 firms include Experian who are developing a mortgage eligibility tool to help consumers who are in the research phase of buying a home increase awareness of their eligibility, based on the lender’s affordability criteria.

Another firm, Money Dashboard, plans to launch a tool that offers an instant view of consumer affordability by aggregating and organising financial transactions from online accounts and mapping them to mortgage lenders’ criteria, supporting a digital mortgage journey.

Evalue have created a fully automated online streamlined advice process for employees in the workplace designed to help them set and achieve realistic retirement goals.

In the sandbox’s first phase, the majority of firms were based in London with a small number from other parts of the UK. As the FCA looks to increase its regional engagement in emerging FinTech hubs, the proportion of regional firms is higher in this cohort.

In cohort one of the sandbox, 24 firms were accepted out of 69 applications and 18 firms had testing plans approved in October 2016. The six month testing window has now closed and firms are submitting final reports, which will be reviewed before the firms transition out of the sandbox. The FCA currently expects most firms to take forward their propositions to market.

The FCA is now accepting applications for third sandbox phase - firms have until 31 July 2017 to submit their applications.

Christopher Woolard, Executive Director of Strategy and Competition at the FCA, said: “The sandbox continues to grow in popularity and it is particularly encouraging that both the number of firms applying and accepted for testing has increased in cohort two. That means more innovative firms, trialling more innovative propositions to bring to the market. This is an important part of the FCA’s commitment to promoting innovation and competition in the markets we regulate.”