Learn how advice from the Government Chief Scientific Adviser
helped launch the world's first financial regulatory sandbox.
In 2014, the Chancellor of the Exchequer commissioned the
Government Chief Scientific Adviser to provide a report
on financial technologies (FinTech) futures and to make
recommendations that will ensure that the sciences continue to
contribute most effectively to FinTech. It looked at:
The report recommended a
number of actions for government to support the growth of
the sector, including the establishment of a ‘regulatory
sandbox'.
In the March 2015 Budget, the Chancellor announced that he would
take forward the recommendation for the ‘regulatory sandbox' and
charged the Financial Conduct Authority (FCA) with developing:
- A system to allow new ideas to be piloted,
and new technologies and consumer propositions to be
tested in virtual and real situations without the threat of
destabilising financial systems or jeopardising consumer
protection. Referred to as
‘regulatory sandboxes'.
The impact from the GO-Science recommendation and the
implementation of the ‘regulatory sandbox' was that in its first
year of operation, 146 applications were received, with
41 going through to the testing phase and
FCA concluding that:
-
Access to the regulatory expertise the sandbox
offers has reduced the time and cost of getting innovative
ideas to market
-
Testing in the sandbox has helped facilitate access
to finance for innovators
-
Enabling products to be tested and introduced to the market
more quickly
-
The sandbox allowed the FCA to work with
innovators to build appropriate consumer protection
safeguards into new products and services
The overall outcome was that the ‘regulatory sandbox' contributed
to making the UK a more attractive place for FinTech start-ups to base
themselves, thus adding to the UK economy and the UK's reputation
for tech and innovation.
