The Financial Conduct Authority (FCA) has announced plans to facilitate the testing of innovative products by firms and to assist new applicants seeking regulatory approval as part of its work programme for 2025-2026.
As part of these initiatives, every firm utilizing the FCA’s Regulatory Sandbox for testing will be assigned an authorisation case officer from the outset. This measure aims to streamline the authorisation process, enabling firms to bring products and services to market more quickly. Since the introduction of the Regulatory Sandbox in 2016, 195 firms catering to UK consumers have been accepted for participation.
Additionally, the FCA’s pre-application support service, now expanded to include all wholesale, payments, and cryptoasset firms, provides additional assistance to those seeking regulatory approval. Nikhil Rathi, FCA chief executive, emphasized the regulator’s commitment to fostering growth, consumer protection, and combating financial crime. He stated, “Our annual work programme outlines our objectives, and today we’re detailing our efforts to support firms wanting to enter our markets with enhanced assistance for their applications and the testing of innovative products.”
To bolster innovation further, the FCA’s AI Lab will collaborate with firms to enhance understanding and facilitate the integration of AI products in financial markets. The regulator also plans to inform more firms when it is ‘minded to approve’ their authorisation applications, allowing them to pursue investment with confidence in attaining regulated status.
On the consumer side, the FCA aims to establish a new regulatory framework to encompass buy now, pay later (BNPL) products. The regulator noted, “This will ensure that those who find BNPL beneficial can continue to use it while fostering innovation among firms and ensuring consumer protection.”
In its fight against financial crime, the FCA intends to develop a new data-driven approach to enhance the identification and management of financial crime. Additionally, it proposes a 2.5 per cent increase in minimum and flat rate fees to align with rising regulatory activities, all while making efforts to lessen the burden on firms by only collecting essential data. The FCA has already identified three routine data returns it plans to eliminate, benefiting 16,000 firms.