FCA opens regulatory sandbox to 24 fintechs

Technology - thumbnailThe FCA has given approval for 24 fintech companies to test new propositions on consumers in a live environment it describes as a ‘regulatory sandbox’.

Applications being tested include a financial services aggregation tool from Bud, a semi-automated debt advice tool from Citizens Advice and a platform that represents private companies’ shares electronically on the blockchain called Otonomos.

Part of the regulator’s Project Innovate, which marks its second anniversary today, the 24 firms will be permitted to road test their products, services, business models and delivery mechanisms in a ‘safe space’ live environment while ensuring that consumers are appropriately protected. The FCA received a total of 69 applications from a diverse range of sectors, geographies and sizes, but 45 did not meet its sandbox eligibility criteria. The 24 successful firms are made up of early stage start-ups, challengers and incumbent firms.
Tests will be conducted on a short-term and small-scale basis, under agreed testing parameters that build in consumer safeguards.

Firms can apply to be part of the FCA’s second sandbox cohort from 21 November 2016. The application period will close on 19 January 2017.

FCA executive director of strategy and competition Christopher Woolard says: “The FCA’s regulatory sandbox was a first for regulators worldwide and underlines our deep commitment to innovation and our willingness to think outside the usual regulatory parameters. We are pleased to announce the first cohort of firms.

“It has been an intense process for both firms and ourselves and we are grateful for their cooperation and hard work in getting us all to this position. We look forward to these businesses bringing new products and services to market whilst we ensure that appropriate consumer protection safeguards are in place.”

Firm Description
Billon An e-money platform based on distributed ledger technology that facilitates the secure transfer and holding of funds using a phone based app.
BitX A cross-border money transfer service powered by digital currencies / blockchain technology.
Blink Innovation Limited An insurance product with an automated claims process, which allows travellers to instantly book a new ticket on their mobile device in the event of a flight cancellation.
Bud An online platform and app which allows users to manage their financial products, with personalised insights, on a single dashboard. Bud’s marketplace introduces relevant services which users can interact with through API integrations.
Citizens Advice A semi-automated advice tool which allows debt advisers and clients to compare the key features of available debt solutions.
Epiphyte A payments service provider that aims to provide cross-border payments using blockchain technology.
Govcoin Limited A technology provider that has partnered with the Department for Work and Pensions (DWP) to determine the feasibility of making emergency payments using means other than cash or the Faster Payments Scheme. The payments platform will use blockchain to allow the DWP to credit value to a mobile device to transfer the value directly to a third party.
HSBC An app developed in partnership with Pariti Technologies, a FinTech start-up, to help customers better manage their finances.
Issufy A web-based software platform that streamlines the overall Initial Public Offering (IPO) distribution process for investors, issuing companies and their advisors.
Lloyds Banking Group An approach that aims to improve the experience for branch customers which is aligned with the online and over the phone experience.
Nextday Property Limited An internet-based property company that will provide an interest free loan for a guaranteed amount to customers if they are unable to sell their property within 90 days.
Nivaura A platform that uses automation and blockchain for issuance and lifecycle management of private placement securities.
Otonomos A platform that represents private companies’ shares electronically on the blockchain, enabling them to manage shareholdings, conduct bookbuilding online and facilitate transfers.
Oval An app which helps users to build up savings by putting aside small amounts of money. These savings can then be used to pay off existing loans early. Oval will be working with Oakam, a consumer credit firm, and a number of their customers during the test period.
SETL A smart-card enabled retail payment system based on their OpenCSD distributed ledger.
Tradle An app and web-based service that creates personal or commercial identity and verifiable documents on a distributed ledger. In partnership with Aviva they will provide a system for automated customer authentication.
Tramonex An e-money platform based on distributed ledger technology that facilitates the use of “smart contracts” to transfer donations to a charity.
Swave A micro savings app that provides an across-account view; enables a round-up service every time a user spends money and calculates an affordable savings amount based on the user’s spending behaviour.