FCA announced the list of 22 firms that have been accepted into cohort six of the regulatory sandbox to test innovative products and services. FCA received 68 applications to cohort six of the regulatory sandbox. Names of participating firms and their project descriptions have been made available. Some of the selected firms are DLA Piper, Climate chain, CrediCar, FundAdminChain, and Hitachi Europe Limited. FCA is also collaborating with key strategic partners and the industry to pilot a digital sandbox, which looks to provide enhanced regulatory support for innovative firms tackling the challenges caused by COVID-19 outbreak.
Applications were received from firms operating in the UK and overseas. The majority of applications came from firms looking to operate in the retail banking, payments, and retail lending sectors. Examples of propositions that have been accepted into cohort six include financial education platforms, a digitized motor finance proposition, safekeeping and transacting of digital assets using distributed ledger technology, and a sustainable finance investment platform, which enables the mobilization of capital toward green projects. This notable proposition from Hitachi Europe Limited involves a "Sustainable Finance Platform" that aims to facilitate the mobilization of capital toward green projects through a "matching function" between investors or lenders and project owners. The prototype uses the "Internet of Things" to communicate operational information about green assets and blockchain for enhanced transparency and security.
Tests will be conducted on a short-term and small-scale basis. FCA work closely with each firm to agree on testing parameters and build in appropriate consumer safeguards. For cohort six, FCA called out, for the first time, areas where it would like to see more innovation. This included propositions that "make finance work for everyone" and "support the UK in the move to a greener economy." More than half of the applications received were propositions that sought to address issues around access and exclusion to financial services and vulnerable consumers, with two successful applicants developing sustainable finance models. The propositions in cohort 6 support the increased demand for digital offerings created by the impact of COVID-19 pandemic.
Keywords: Europe, UK, Banking, Insurance, Securities, COVID-19, Fintech, Regtech, Cohort 6, Regulatory Sandbox, Sustainable Finance, ESG, Climate Change Risk, FCA
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Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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