Speaking today at the Financial Conduct Authority's robo-advice conference held in London economic secretary Harriet Baldwin revealed plans to create a “regulatory sandbox” that would allow new technology to test compliance in a “safe” environment.
The sandbox will be part of the FCA’s innovation hub which launched in March 2014 and has helped over 100 innovative businesses get authorisation since then.
Baldwin said: “This is a great example of the resources available to FinTech firms such as those wishing to develop robo-advice.
“I’m aware that there are firms that have developed new cheaper models of advice, but feel that regulatory issues prevent them from taking these to market.
“One of the areas we’re currently working closely with the FCA and the Prudential Regulatory Authority is the feasibility of something called a regulatory ‘sandbox’.
“Essentially, this is a “safe space” where innovators can experiment with new ideas at an early stage, without the burden of having to get regulatory authorisation, but with the informed consent of consumers, and appropriate risk management.
“Once up and running, this could be a valuable tool for firms wishing to test robo-advice models.”
Baldwin said one leading company told the government that if they wanted to enter the online advice market, in order to comply with current regulation, their survey would have to ask 247 questions.
She added: “That is why we are reviewing the advice landscape, and launching the Financial Advice Market Review to report by Budget 2016.
“We have specifically charged FAMR with examining the opportunities and challenges presented by new and emerging technologies to provide cost effective, efficient, and user friendly advice services.”
The review will consider a variety of retail financial products, including pensions, savings, mortgages, and insurance.
Baldwin also announced the appointment of Eileen Burbidge as special envoy for FinTech. In this role she will promote the UK as a global FinTech hub and help develop the government’s FinTech strategy.
She will also support Treasury engagement with FinTech firms in the UK, particularly in developing regional partnerships.
Baldwin added: “Because a lot of this will be technology-based, as well as making sure we’ve got the right statutory environment, we want to give a real boost to technological innovation.
“We are already a major player in financial technology; our ambition is now to be the major player – the leading FinTech centre in the world.”
