Regulatory sandbox - FCA opens cohort 5 applications

The FCA’s regulatory sandbox allows innovative businesses to test new products or services and is open to authorised firms, unauthorised firms that require authorisation and technology businesses.

Cohort 5

The FCA has opened applications to cohort 5 of the regulatory sandbox and the deadline for applications is Friday 30 November 2018. Members wishing to apply can contact the FCA to discuss the process before application by email:, or by telephoning 020 7066 4488. Click here to access the FCA’s application form

Eligibility criteria

Information on how to apply and the eligibility criteria, can be found here. A firm’s application must clearly explain how its proposition satisfies FCA’s eligibility criteria, which are:

  • in scope: is it looking to deliver innovation that is either regulated business or supports regulated business in the UK financial services market?
  • genuine innovation: is the innovation new or a significantly different offering in the marketplace?
  • consumer benefit: does the innovation offer a good prospect of identifiable benefit to consumers (either directly or via heightened competition)? Here the application must provide for mitigation of any identified possible consumer risks
  • need for a sandbox: Is there a genuine need to test the innovation in the FCA’s sandbox (i.e. the innovation does not easily fit the existing regulatory framework, making it difficult or costly to get the innovation to market)?
  • ready for testing: is it you ready to test the innovation in the real market with real consumers?

Sandbox tools

The FCA also provides a range of tools to sandbox firms to help facilitate testing a proposition and applies a tailored authorisation and registration process for firms accepted. This is restricted to allow firms to test only the proposition agreed. The FCA may also be able to waive or modify certain rules to aid testing, as deemed appropriate.

Regulatory insight

The regulatory sandbox was launched in June 2016 and the FCA captured its own insights from testing in a lessons learned report.  Firms can also access guidance through the application process on FCA’s authorisation pages.

Sandbox cohorts

To date, the FCA has received 89 companies into its regulatory sandbox programme. The applications span a diverse range of sectors, locations and firm size. Accepted propositions include distributed ledger (blockchain) technology-based payment services, RegTech propositions, general insurance, mortgage advice, cross-border remittance, anti-money laundering (AML) controls, biometric digital ID, know your customer (KYC) verification and Initial Coin Offerings (ICOs), By cohort 4, the FCA had received a number of applications using cryptoassets. Here, it is keen to explore whether, in a controlled environment, consumer benefits can be delivered.  Further information on previous regulatory sandbox cohorts::

June 2017: cohort 1  (18 companies) ; cohort 2  (24 companies); cohort 3  (18 companies)

July 2018: cohort 4  (29 companies)

Global Sandbox

In August, the FCA announced the creation of the Global Financial Innovation Network (GFIN) in collaboration with 11 financial regulators and related organisations. It also published a consultation seeking views on the GFIN mission statement, its proposed functions and priorities. Market feedback, from an earlier FCA consultation, highlighted the anticipated benefits of a global sandbox approach in improving ‘speed to market’ in multiple regulatory jurisdictions, but also highlighted a wide range of cross-border issues to address around: artificial intelligence, distributed ledger technology, data protection, regulation of securities and ICOs, KYC and AML.

  • Ruth Milligan

    Ruth Milligan

    Head of Programme | Digital ID and Open Data
    T 020 7331 2173

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