FCA announces the fourth cohort of its regulatory sandbox

The UK’s Financial Conduct Authority (FCA) has announced the 29 companies that make up the fourth cohort for its regulatory sandbox program.

Its sandbox enables companies to test products, services or business models in a live market environment, while appropriate protections support them.

The initiative initially launched in 2014 to promote competition and was the first of its kind, globally. Since its debut program, it has received over 1,200 applications, and supported more than 500 firms.

Cohort 4 received 69 applications, of which, 29 were selected to join the sandbox. Of those selected, eight are from the wholesale sector, an increase from the three that made it into the previous sandbox group. There will be five large firm tests for the cohort, the most to date.

More than 40 per cent of the companies in the group are using distributed ledger technology, with six of these using it to automate the issuance of debt or equity, while two are using it for the provision of insurance.

A handful of companies are testing propositions related to cryptoassets, with the FCA being ‘keen to explore whether, in a controlled environment, consumer benefits can be delivered while effectively managing the associated risks.’

Tests for the cohort will be on a short-term and small-scale basis.

FCA executive director of Strategy and Competition Christopher Woolard said, “Cohort 4 has seen a large increase in the number of firms testing wholesale propositions including firms that are aiming to increase the efficiency of the capital-raising process.

“Alongside these we can see significant use of distributed ledger technology (DLT), some experimentation with cryptoassets which will help inform our policy work and propositions aimed at helping lower income consumers.”

Natwest is joins the cohort, where is looking to test a governance model based on DLT which will enable organisations to work collaboratively on developing and running decentralised applications. Its new model will use smart contracts on a blockchain platform to create a digital mutual.

Mortgage Kart was one of the companies to be accepted on to the cohort. It provides automated advice to consumers to help them select the best mortgage for them, accounting for their needs and circumstances.

Another company to make the selection was Salary Finance, a payroll linked lending platform which provides consumers access to their income a day or week early.

Meet Mia is also among the new entrants. The business provides a chatbot through Facebook Messenger, which allows consumers to buy and manage travel insurance. Its chatbot can explain what the policies will cover and will provide discounts and automate claim processing.

The remaining companies in Cohort 4 include:

Regulated bond issuance platform BlockEx, tokenised debt solution Capexmove, good money management Chasing Returns, identity digital token developer Community First Credit Union, customer authentication service Creativity Software, investment platform CreditSCRIPT, mortgage advice company Dashly and smart contract software Eherisc.

Blockchain-based debt and equity administer Fineqia, SME financing insight generator Fractal, SME capital raising platform Globacap, automated governance solution Hub85, contract buying and selling facilitator London Media Exchange, small business current account provider Mettle, consumer financial plan recommendation service Multiply, and KYC solution NorthRow.

Funding platform TokenMarket, blockchain-powered payment card Tokencard, insurance procut distributor Universal Tokens, KYC and AML solution Veridu Labs, global trade payments company World Reserve Trust, pension transfer service Zippen, retirement advice app 1825, and DLT-based capital raising platform 20|30.

The application window for the fifth cohort will open later in the year.

The full list of companies can be found here.

Copyright © 2018 FinTech Global

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