Guide
Use FCA innovation services to test and launch fintech products
How to use the FCA's innovation support services including the Regulatory Sandbox, Digital Sandbox, and Innovation Pathways. For fintech firms developing new financial products who need regulatory guidance or want to test with customers before full authorisation.
If you're developing an innovative financial product or service, the FCA offers several support programmes to help you navigate regulation and bring your product to market. These services are designed for genuine innovators who face regulatory uncertainty.
This guide explains:
- The Regulatory Sandbox - test with real customers under FCA supervision
- The Digital Sandbox - test with synthetic data year-round
- Innovation Pathways - pre-application support for authorisation
- Which service is right for your business
- When you need full authorisation instead
FCA innovation support services
The FCA's innovation team has supported over 800 firms since 2016. Around 90% of firms that complete sandbox testing successfully exit to full authorisation.
Choosing the right service
The FCA offers different services depending on where you are in your journey:
- Early stage (idea/prototype): Use the Digital Sandbox or Innovation Hub for guidance
- Ready to test with customers: Apply for the Regulatory Sandbox
- Ready for authorisation: Use Innovation Pathways for pre-application support
- Scaling an existing business: Use Scalebox for support with growth
Regulatory Sandbox
The Regulatory Sandbox allows you to test innovative products with real customers in a controlled environment with FCA support. It's not a shortcut to avoid regulation - you still need appropriate authorisation. Instead, it provides regulatory certainty and support during testing.
What happens in the sandbox
During a typical 3-6 month sandbox test:
- You receive a restricted authorisation or modification allowing your specific test
- You test with a limited number of real customers
- You report regularly to the FCA on progress and issues
- You work with an FCA case officer who understands your proposition
- You may have modified requirements (e.g., reduced capital) during testing
After testing, most firms apply for full authorisation using evidence from their sandbox test. The FCA's familiarity with your business typically speeds up the authorisation process.
What the sandbox is not
The sandbox is not:
- A way to avoid regulation entirely
- A guarantee of eventual authorisation
- Suitable for established products or services
- Open to firms without a developed proposition ready to test
Digital Sandbox
The Digital Sandbox is a permanent, always-open testing environment using synthetic data. Unlike the Regulatory Sandbox, you don't need live customers or restricted authorisation - you can test your technology at any time.
When to use the Digital Sandbox
The Digital Sandbox is ideal if you:
- Want to test technology before involving real customers
- Need to demonstrate your product to investors
- Are refining your proposition before applying for the Regulatory Sandbox
- Want to experiment without regulatory commitments
It provides access to synthetic data sets that mirror real financial data, allowing you to test algorithms, integrations, and processes.
Innovation Pathways
Innovation Pathways provides pre-application support for firms seeking authorisation. The FCA works with you before you submit your formal application to help you understand requirements and prepare a stronger application.
Benefits of Innovation Pathways:
- Dedicated FCA contact during preparation
- Clarity on which permissions you need
- Guidance on threshold conditions specific to your business
- Reduced risk of application delays or rejection
- Typically faster authorisation once you do apply
Innovation Pathways is particularly valuable for novel business models where the regulatory treatment is unclear. The FCA case officer can help you understand how existing rules apply to your specific proposition.
When you need full authorisation
Innovation services are support programmes - they don't replace the need for appropriate authorisation. If you conduct regulated activities without authorisation or an exemption, you commit a criminal offence.
Timelines for fintech firms
Authorisation timelines vary significantly based on your activities and application quality. Using innovation services can reduce these timelines by helping you prepare a stronger application.
Improving your timeline
To reduce authorisation time:
- Use Innovation Pathways - Pre-application engagement reduces queries and rejections
- Submit a complete application - Incomplete applications cause the most delays
- Respond to FCA queries promptly - Slow responses extend timelines significantly
- Have SM&CR individuals ready - Senior manager approvals run in parallel with firm authorisation
- Prepare all policies and procedures - Don't submit drafts or placeholders
Global Financial Innovation Network (GFIN)
If you plan to operate in multiple countries, the FCA participates in GFIN - a network of regulators offering coordinated support for cross-border innovation testing.
GFIN members include regulators from:
- Australia (ASIC)
- Singapore (MAS)
- Hong Kong (HKMA, SFC)
- United States (various state and federal regulators)
- Many other jurisdictions
Through GFIN, you can potentially test your product across multiple markets simultaneously, with coordinated regulatory support.
How to apply for innovation services
Applications to innovation services are made directly to the FCA Innovation team:
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Check eligibility
Review the eligibility criteria for your chosen service. For Regulatory Sandbox, you need a genuinely innovative proposition ready to test - not just an idea.
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Prepare your application
Describe your innovation, the consumer benefit, why you need sandbox support, and your testing plan. The FCA wants to understand what makes your proposition different.
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Submit to the Innovation team
Contact the FCA Innovation team via their dedicated email or online portal. Applications are reviewed on a rolling basis (Digital Sandbox) or in cohorts (Regulatory Sandbox).
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Attend initial assessment
If your application is promising, the FCA will schedule a call to understand your proposition better and assess fit for the programme.
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Agree testing parameters
For Regulatory Sandbox, you'll agree specific testing parameters including customer numbers, duration, and reporting requirements.
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Complete testing and exit
After successful testing, work with the FCA to transition to full authorisation or an alternative permanent arrangement.