The UK’s financial regulator, the Financial Conduct Authority (FCA), has announced today that it has incorporated 22 businesses into cohort 6 of the regulatory sandbox. Through this, these businesses will test innovative services and products.
22 Out Of 68 Applications Accepted
The total amount of applications to join cohort 6 of the regulatory sandbox received by the FCA totaled in 68. Applications for cohort six came from firms operating both within the UK, and overseas. The majority of these applications came from firms seeking to operate in payments, retail banking, and retail lending sectors.
For the first time, the FCA called out areas for cohort 6, particularly areas the regulator would like to see innovation, in particular. This includes propositions focusing on making finance something for everyone, as well as propositions to move the UK into a greener economy. Over half of the applications received were propositions that aimed to address issues regarding the exclusion and access to vulnerable consumers and financial services. It should be noted that only two successful applicants developed sustainable finance models.
Focusing On Finance As A Whole
More examples of propositions that were accepted into cohort six include a digitized motor finance proposition, financial education platforms, and sustainable finance investment platforms. Furthermore, a proposition accepted was in regards to distributed ledger technology, and the holding and transacting of digital assets within its sphere of influence. This will allow capital mobilization towards green projects, as well.
As it stands now, tests will be done on a small-scale, short term basis. The FCA has worked closely with each of these firms in order to agree to build appropriate consumer safeguards, as well as proper testing parameters.
The regulator is also making collaborations with the industry and key strategic partners in order to pilot a digital sandbox. This will provide enhanced regulatory support when it comes to innovative firms dedicated to addressing the COVID-19 pandemic.
Six Cohorts, Overall
It should be noted that the FCA had integrated 29 businesses into Cohort 5 of the regulatory sandbox. This part of the regulatory sandbox tests primarily innovative services, products, delivery mechanisms, as well as business models. For Cohort 5, the FCA had received an incredible 99 applications, which is the largest number of applications to date. Most of the firms that applied were actively seeking to operate within the retail and wholesale banking sectors, as well.