A regulatory sandbox allows businesses to test innovative propositions in the market, with real consumers, using the protection of the financial services regulator. Sandboxes are open to authorised firms, unauthorised firms that require authorisation and technology businesses. The sandbox seeks to provide firms with:
- the ability to test products and services in a controlled environment
- reduced time-to-market at potentially lower cost
- support in identifying appropriate consumer protection safeguards to build into new products and services
- better access to finance
The sandbox also offers tools such as restricted authorisation, individual guidance, informal steers, waivers and no enforcement action letters and are closely overseen by the Financial Services regulator. The tests are expected to have a clear objective (e.g. reducing costs to consumers) and to be conducted on a small scale, so firms will test their innovation for limited duration with a limited number of customers.