The document discusses the UK Financial Conduct Authority's (FCA) Project Innovate initiative, which was launched in October 2014 to encourage financial innovation. Some key points: - Project Innovate has supported over 300 firms and 76% of firms rated their experience positively. - The regulatory sandbox allows firms to test innovative products with real customers in a safe space, reducing time-to-market and costs while ensuring appropriate consumer protections. - The FCA cooperates internationally to facilitate innovative firms and promote pro-innovation regulation globally. This includes agreements with regulators in Australia, Singapore, and South Korea. - The objectives of the regulatory sandbox are to encourage more innovative products reaching consumers with reduced costs

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2. In the beginning…
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Launched in October 2014.
Aim is to encourage innovation
in the interests of consumers.
Innovation can be a
powerful driver of
effective competition in
the interests of consumers.
Helps FCA keep pace with
market developments,
understand possible
benefits and risks to
consumers.
Encourage
innovation
in the interests
of consumers
Better risk
management
Better value
for money
Greater
inclusion
More
efficient
value chain
Better user
experience

3. Project Innovate - 23 months old
608
Requests for
support
42
Firms authorised
or awaiting
authorisation
decision
312 Firms supported
76%
Rated overall
experience as good
or excellent

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5. Supervision
End-to-end service
AuthorisationsInnovation Hub
Ad-hoc inputs
Deliverables
• Authorisations - Shorter
period awaiting authorisation
and thus encourages
competition.
• Supervision – FCA can
monitor any risks perceived
during authorisation. Helps us
identify whether the innovation
is in the interests of
consumers.
End-to-
end
process
A seamless transition between FCA departments for new market entrants.

6. RegTech
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Objective:
• To encourage technological innovation that improves compliance while
reducing the cost of regulation
Our work to date:
• Call for Input in November 2015, followed by a surgery and roundtables
• TechSprint in April 2016 to find solutions to some of the issues affecting
consumer access to financial services.
• TechSprint in November 2016 addressing ‘Unlocking Regulatory
Reporting’ where technology directly impacts the interface between the
regulator and the regulated.

7. Our international engagement
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Our international engagement approach is to:
• Facilitate the entry of innovative overseas firms into the UK
• Facilitate the expansion of innovative UK firms overseas
• Promote pro-innovation regulation to international standard-setting
bodies
The FCA has signed a Co-operation Agreements with a number of
other regulators including:
• Australia (ASIC’s Innovation Hub and plans for sandbox)
• Singapore (MAS’ Financial Technology and Innovation Group and plans for
sandbox)
• Korea (Korean Financial Services Commission (FSC))

8. Regulatory sandbox
Regulatory sandbox - safe space for businesses
to test out innovative ideas with real people
Objectives:
• Reduced time-to-market at potentially lower cost
• Better access to finance
• More innovative products reaching the market
• Appropriate consumer protection safeguards built in to
new products and services
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9. Regulatory sandbox – options
Unauthorised firms
• Barrier to testing: unauthorised firms
providing financial services
• Sandbox option: restricted authorisation
All firms
• Barrier to testing: concern regarding FCA
reaction to new solutions
• Sandbox options:
─ No enforcement action letters
─ Individual Guidance
─ Waivers
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10. Customer protection
•Direct or indirect benefit to consumers
•Appropriate testing parameters and
customer safeguards when testing
•Fair exit strategy for customers
Three elements of protection:
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11. Firm journey
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Sandbox Criteria
Firm in scope / Genuine innovation / Consumer
benefit / Need for sandbox / Readiness to test

12. Closing remarks
• Technology offers transformative
opportunities for financial services
• Can help ensure evolving consumer
needs are met
• FCA supports innovation that advances
our objectives and benefits consumers
• FCA Innovation Hub and supporting
initiatives established in response
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