Global menu

Our global pages


FCA provides fresh guidance on Regulatory Sandbox and Innovation Pathways

  • United Kingdom
  • Financial services and markets regulation
  • Financial services - Fintech


The FCA is increasing its support for innovation to expand and protect intelligence and data assets within the UK financial services market. As discussed at the Innovation Finance Global Summit, the Regulatory Sandbox and Innovation Pathways initiatives will be important tools for this strategy.

Innovation Finance Global Summit

Jessica Rusu, Chief Data, Information and Intelligence Officer at the FCA, outlined three core themes for the regulator:

  • fostering innovation
  • preparing for the future
  • being intelligence-led

The FCA aims to create an “enabling environment” for innovation. Alongside the Regulatory Sandbox and Innovation Pathways, the regulator’s support for firms will focus on scaling-up, data protection and artificial intelligence.

The FCA will use technology and innovation to ensure regulations are “fit for purpose in a rapidly changing market”. The FCA’s priorities in this area include ESG and climate change. The regulator intends to lead the way in supporting behaviours that will aid the transition to a greener and more ethical economy.

The FCA pledged to use data science and advanced analytics to become an “intelligence-led” regulator.  Fundamental to this will be the FCA Data Strategy and the Digital Unified Intelligence Environment.

Regulatory Sandbox

The FCA has given fresh guidance on its existing Regulatory Sandbox, including new advice on navigating the application process.  The sandbox allows businesses “to test innovative propositions in the market with real consumers”.  Applications are open to all sectors of the financial services market, can be made at any time and are free of charge.  Applicants must either be authorised firms, unauthorised firms that require authorisation or technology firms partnering with, or providing services to, UK firms doing regulated activities.

Jessica Rusu commented that 92% of firms who have used the Regulatory Sandbox have since become authorised.

Applicants must ensure their proposals are intended for the UK financial services market, so they must either involve regulated activities or support firms undertaking regulated activities.  Proposals must demonstrate a clear objective for their sandbox test, benefit consumers and have a genuine need for FCA support.  Firms should have built a version of the proposition they are looking to test prior to application.

Innovation Pathways

Innovation Pathways is a new scheme.  Jessica Rusu says it “will play a key role in informing and ensuring our regulatory environment is fit for future innovation”. The core aim is to help regulated firms at all stages of development launch innovative products.  The FCA aims to do this by explaining its rules in a “clear and engaging way”.

The scheme will promote innovation by helping businesses understand how regulation relates to their activities, remove barriers to entry through ongoing monitoring of FCA rules, clarify existing rules in relation to new business models and help firms understand their obligations as regulated firms.

Like the Regulatory Sandbox, Innovation Pathways is only available for proposals intended for the UK financial services market.  Proposals must be innovative, have clear consumer benefits, require FCA support and be sufficiently developed. 

Innovation Pathways will receive applications from firms based overseas who want to expand into the UK.

For more information on the guidance above or matters regarding Fintech, please contact your usual Eversheds Sutherland contact or get in touch with the contacts below: