FMA introduces regulatory sandbox pilot to boost financial innovation
The Financial Markets Authority (FMA) has announced a pilot regulatory sandbox program, aimed at fostering innovation in the financial services sector.
The initiative, which will run from January to July, invites firms to test innovative products, services, or business models within a controlled environment.
A decision on the implementation of a permanent regulatory sandbox will follow later in the year.
Supporting innovation across the financial sector
The regulatory sandbox pilot will be open to all firms within FMA’s jurisdiction, including both new market entrants and established businesses.
Additionally, the pilot extends beyond traditional financial services, welcoming applications from firms offering solutions like regulatory technologies, blockchain tools, or compliance simplification services.
The regulatory sandbox model aims to accelerate innovation by allowing companies to test their systems under close supervision. Firms will gain a clearer understanding of regulatory expectations and have an opportunity to refine their offerings before a full market launch, reducing both risk and cost.
“By first testing a product or service in a regulatory sandbox, we should be able to better assess the viability of innovative products and services,” FMA said.
Benefits for firms and the regulator
Participating firms will gain key insights and an opportunity to address challenges in their regulatory compliance strategies. Meanwhile, FMA benefits from greater understanding of emerging financial technologies, enabling it to identify gaps in investor and consumer protection and address regulatory challenges more efficiently.
“Experiences gained through such a testing phase should allow the FMA to react faster and more effectively to regulatory and supervisory problems,” the authority said.
Application process and eligibility
FMA, which released its first Consumer Confidence Survey this month, is now seeking expressions of interest from firms interested in participating in the regulatory sandbox pilot. It is also encouraging applications from firms developing products outside the pilot’s six-month timeframe to gauge potential demand.
To qualify for the regulatory sandbox, firms must:
- Have a product ready for customer testing in the New Zealand market.
- Understand relevant financial regulations that apply to their product or service.
- Identify specific areas where FMA guidance is required to support their launch plans.
FMA will evaluate applications based on the firm’s readiness, identified barriers to market entry, and the role the sandbox can play in overcoming these challenges.
Collaboration with industry stakeholders
FMA, which recently published its insights report on the inaugural set of climate-related disclosures from climate reporting entities (CREs), acknowledged the valuable contributions from FintechNZ and its members in shaping the sandbox framework. This collaboration has helped align the pilot with industry needs while ensuring it supports meaningful innovation.
Next steps for interested firms
Firms keen to participate in the 2025 pilot phase are encouraged to submit their applications to FMA.
This initiative represents a unique opportunity to test new financial products and services, refine compliance processes, and contribute to the evolution of New Zealand’s financial landscape.
See the FMA media release here. Please fill out the Regulatory Sandbox expression of interest form, or contact Alan Crofts, FMA technical specialist for fintech and innovation, for further details.
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