The Financial Conduct Authority has unveiled plans to make it easier for firms to test innovative products and to support new firms applying for regulatory approval as part of its work programme for 2025-2026.
Under the plans, every firm that uses the FCA's Regulatory Sandbox to safely test innovative products will be provided with an authorisation case officer from the start, as part of an effort to help the right firms get authorised and bring products and services to market faster.
Since it was introduced in 2016, 195 firms serving UK consumers have been accepted into the FCA’s regulatory sandbox.
The FCA's pre-application support service, which provides extra support for firms seeking regulatory approval, is also now extended to all wholesale, payments, and cryptoasset firms.
Nikhil Rathi, chief executive of the FCA, says: "We're committed to being a smarter regulator - one that supports growth, helps consumers and fights crime. Our annual work programme details what we will deliver to achieve these goals. And today, we’re setting out how we’ll go further to help firms that want to join our markets with greater support for the application process and to test innovative products."
To further encourage innovation, the FCA's AI Lab will work with firms to deepen understanding and support the use of AI products to drive growth and competitiveness in financial markets.
The regulator will also let more firms know it is 'minded to approve' applications for authorisation when it thinks they can meet required standards. This will allow firms to seek investment with confidence that they can secure regulated status.
On the consumer front, the FCA intends to create a new regulatory framework, which will see buy now, pay later products brought under its ambit.
The FCA states: "This will help ensure that those who find BNPL helpful can still benefit from it, firms can innovate and grow, and consumers are appropriately protected.
As part of fighting financial crime the regulator says it intends to build a new data-led detection capability to increase identification of financial crime and take action to tackle it.
The FCA is also proposing to increase minimum and flat rate fees by 2.5 per cent in line with the increase in ongoing regulatory activities, while working to reduce the burden on firms by only collecting essential data. It has already identified three regular data returns it plans to stop, which will benefit 16,000 firms.