The FCA Regulatory Sandbox

Venture Catalysts are not just money invested, but people and time.  When Sturgeon Ventures was first born in 1998, it branded itself as a Venture Catalyst, it incubated people and companies across a number of industries; in 2000 the focus began towards financial services and the regulatory incubator was born in early 2000.

A highlight of innovation has been embraced by the UK’s Financial Conduct Authority and for those away in the summer, you have had missed the latest update from the FCA as it closed its 3rd cohort.
Sturgeon has incubated innovators in the last year that benefited from the Sandbox, with a very positive feedback on its team.

Information on the FCA Regulatory Sandbox

Last updated: 08/08/2017
The regulatory sandbox allows businesses to test innovative products, services, business models and delivery mechanisms in the real market, with real consumers.
The sandbox is a supervised space, open to both authorised and unauthorised firms, that provides firms with:

  • Reduced time-to-market at potentially lower cost
  • Appropriate consumer protection safeguards built in to new products and services
  • Better access to finance

The sandbox offers tools such as restricted authorisation, individual guidance, waivers and no enforcement action letters.
We closely oversee trials using a customised regulatory environment for each pilot – including safeguards for financial consumers.
Sandbox tests are expected to have a clear objective (e.g. reducing costs to consumers) and to be conducted small scale, so firms will test their innovation for limited duration with a limited number of customers.
Sandbox cohort 3: the application window for sandbox cohort 3 is now closed.
Sandbox cohort 2: the firms accepted into sandbox cohort 2 were announced on 15 June 2017.

Who the sandbox is for

Businesses seeking authorisation

The sandbox may be useful for firms that need to become authorised before testing their innovation in a live environment.

Authorised businesses

The sandbox may be useful for authorised firms looking for clarity about rules before testing an idea that doesn’t easily fit into the existing regulatory framework.

Technology businesses supporting financial services firms

Technology businesses that want to provide services to our regulated firms (eg through outsourcing agreements) can also apply for the sandbox if they need clarity about rules before testing.

Sandbox tools

We can provide a number of tools to authorised and unauthorised firms, if required.

Restricted authorisation

To conduct a regulated activity in the UK, a firm must be authorised or registered by us, unless certain exemptions apply. Successful firms will need to apply for the relevant authorisation or registration in order to test.
We have a tailored authorisation process for firms accepted into the sandbox. Any authorisation or registration will be restricted to allow firms to test only their ideas as agreed with us.
This should make it easier for firms to meet our requirements and reduce the cost and time to get the test up and running.
If you require a restricted authorisation you will have to pay an application fee.

Individual guidance

If you’re unclear how our rules apply to your firm, we can explain how we would interpret the requirements in the context of your specific test.

Waivers or modifications to our rules

We may be able to waive or modify an unduly burdensome rule, for the purpose of the test. We are not able to waive national or international law.

No enforcement action letters

For cases where we can’t issue individual guidance or waivers but believe it’s justified in light of the particular circumstances and characteristics of the sandbox test, we can issue ‘no enforcement action’ letters.
As long the firm deals with us openly, keeps to the agreed testing parameters and treats customers fairly, we accept that unexpected issues may arise and wouldn’t expect to take disciplinary action.
The letter would only apply for the duration of the sandbox test, only to our disciplinary action and would not limit any liabilities to consumers.

Apply for Regulatory Sandbox

The application window for cohort 3 is now closed.
Watch the FCA website for next opening – FCA Regulatory Sandbox

Sturgeon Ventures are the most established Regulated Incubator, a trusted partner and venture catalyst. Providing nurturing and bespoke solutions, also known as a Regulated Umbrella, Regulatory Hosting Platform or a Regulatory Ecosystem.
Sturgeon Ventures, with offices in London, has incubated people and firms since 1999 and has been a family office wealth advisor since 1998 . We have been nominated and won many awards including most recently 4 wins at the ACQ Awards 2017 – Europe, Regulatory Hosting Platform of the year, UK – Game Changer of the Year – Seonaid Mackenzie, UK – Family Office Wealth Advisor of the Year and International Business Strategy Consultancy of the Year; M&A Awards 2017 UK Compliance Consultancy – Start-up Issues and UK Adivsor of the Year – Seonaid Mackenzie, Best Regulatory Incubator 2017 and FinServ Gamechanger Innovation Award 2017 at the Acquisition International Magazine’s annual awards and HedgeWeek Awards Winner 2016 for Best Global Consultant in Business Strategy.
Sturgeon Ventures are proud to have signed up to HM Treasury’s Women in Finance Charter, since the start of this initiative in July 2016 and to contribute to industry publications such as Acquisition International and The Corporate Financier.
It’s founder, Seonaid Mackenzie, has also written a contributing chapter in “Successfully Launching A Hedge Fund In Europe: Practical Guidance For New Managers” on the subject of pioneering Regulatory Incubation.

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