The UK Financial Conduct Authority (FCA) has accepted 13 firms into cohort 7 of the regulatory sandbox to test innovative products and services.

The watchdog received 58 applications to cohort 7 of the regulatory sandbox. Applications came from firms operating in the UK and overseas. The majority of applications for this cohort came from firms in the retail investments and retail lending sectors.

The FCA explains that, in the wider context of coronavirus, it was interested in seeing more innovation and testing from firms developing businesses, products or services intended to detect fraud and scams, support the financial resilience of vulnerable consumers, or improve access to finance for small and medium-sized enterprises (SMEs).

The FCA notes that innovative firms wish to trial and scale innovative products or services across multiple jurisdictions. The Global Financial Innovation Network (GFIN), chaired by the FCA with a network of 72 financial regulators and related organisations, developed a cross-border testing environment for scale-up firms. The GFIN is working with a select group of firms to agree cross-border testing plans, and 2 firms have been accepted to proceed with domestic tests in the regulatory sandbox.

The regulator continues to seek out opportunities to support innovation in the interests of consumers. In November 2020 it launched the ‘Digital Sandbox’ pilot with the City of London, aimed at testing a suite of tools to support early stage innovation. A total of 94 firms applied, of which 28 successfully met the eligibility criteria and participated in the digital sandbox for the 11-week pilot.

The pilot demonstrated that there is significant industry demand for a digital testing environment, and the digital sandbox will be accepting applications for its second cohort later in the year around the themes of sustainability and climate change.

The regulatory sandbox is currently run on a cohort basis, with periodic application windows opened throughout the year.

Tests in the regulatory sandbox will be conducted on a short-term and small-scale basis. The FCA will work closely with each firm to agree testing parameters and build in appropriate safeguards.

The list of cohort 7 firms includes: Bayfikr, Blockpass, Cardeo, Chekk, Hlthie, JO1N, Kontinuous, Project Endeavour, StarLiX, TrustElevate, VALK and CMS, Willow Money, and Yonder.