The regulatory sandbox (“sandbox”), part of Innovate, allows firms to test innovative products, services and business models in a live market environment, while ensuring that appropriate safeguards are in place. It was established following a feasibility report published in November 2015 to support the FCA’s objective of promoting effective competition in the interests of consumers. The November 2015 report set out the potential benefits of the sandbox that would support this objective as:

• reducing the time and, potentially, the cost of getting innovative ideas to market
• enabling greater access to finance for innovators, by reducing regulatory uncertainty
• enabling more products to be tested and, thus, potentially introduced to the market
• allowing the FCA to work with innovators to ensure that appropriate consumer
• protection safeguards are built into new products and services

This report reflects on how the sandbox has met its objectives over the first year of operation. It will:

• further explain how the sandbox operates
• discuss the impact on the market and our insights from testing over the first year of the sandbox
• explain limitations firms have faced when testing in the sandbox