Recommendation 102

Several witnesses highlighted the success of the FCA’s Regulatory Sandbox in allowing firms to develop new products in a closely supervised environment and recommended that the FCA build on this success. 164 TheCityUK told us that: “The FCA’s sandbox has been effective to date and they recognise the need to expand the scale of sandboxes”, 165 but added that the Regulatory Sandbox “is now 10 years old and the FCA should work with the industry to develop successor programmes.” 166 Innovate Finance described the Bank of England and the FCA’s joint Digital Securities Sandbox as a “good example of excellent pro-innovation joined up approach”. 167 Innovate Finance praised the approach taken by the Bank of England and the FCA to operating the Digital Securities Sandbox, which it described as allowing: “… the regulators (FCA and Bank of England) to get in the sandbox and experiment with the regulatory rule book—with powers for the regulator to turn regulatory controls on and off. This is genuine collaboration and innovation, which enables the regulatory framework to be tested and developed in real time as new services and products are tested. We would encourage this to become the norm.” 168