Regulatory sandboxes in financial services

The House of Lords Financial Services Regulation Committee, chaired by The Baroness Noakes DBE, has launched an inquiry into regulatory sandboxes in financial services.

The inquiry is focused on understanding the purpose and impact of regulatory sandboxes in UK financial services. The Committee is interested in hearing whether sandboxes promote innovation, whether they offer wider public benefits and value for money, whether sandboxes shape markets through their selection of firms, and whether sandboxes help to produce good regulatory policy, particularly for emerging technologies. For the purposes of this inquiry, “regulatory sandboxes” includes the different types of sandbox operated by the FCA, including its Regulatory Sandbox and Digital Sandboxes, as well as the Digital Securities Sandbox operated jointly with the Bank of England.

The Committee is interested to hear from a broad range of stakeholders with experience and views on regulatory sandboxes, including both participating and non-participating firms.

The Committee is seeking evidence on the following questions:

1. What purposes do regulatory sandboxes serve in UK financial services?

a) Has their role changed in the 10 years since the launch of the first FCA sandbox in 2016?

2. What has been the impact of regulatory sandboxes in UK financial services, and how has this been measured?

a) Has the long-term impact of regulatory sandboxes been sufficiently assessed?

3. Have regulatory sandboxes improved innovation and competition in UK financial services?

4. Do regulatory sandboxes provide wider public benefit and value for money, compared with other forms of regulatory and market engagement?

5. Why do firms choose to apply, or not to apply, to participate in a regulatory sandbox?

6. How well do the eligibility criteria and selection processes for regulatory sandboxes operate?

7. What effects does participation in a regulatory sandbox have on participating and non-participating firms, investors and the wider market?

8. What role should regulatory sandboxes play in informing the development of regulation, particularly for emerging technologies?

a) How effectively do regulators learn from regulatory sandboxes? To what extent are learnings from regulatory sandboxes shared or used more widely?

9. How effectively do regulatory sandboxes manage risks to consumers and markets, and what safeguards and accountability arrangements are in place?

10. To what extent are regulatory sandboxes being used to test agentic AI, and does this introduce any new risks for the use of regulatory sandboxes?

11. How does the UK’s use of regulatory sandboxes in financial services compare with approaches in other jurisdictions and sectors?

Diversity comes in many forms and hearing a range of different perspectives means that committees are better informed and can more effectively scrutinise public policy and legislation. Committees can undertake their role most effectively when they hear from a wide range of individuals, sectors or groups in society affected by a particular policy or piece of legislation. We encourage anyone with experience or expertise of an issue under investigation by a select committee to share their views with the committee, with the full knowledge that their views have value and are welcome.

Evidence goes to the committee through Parliament’s own form. There is no way to submit it from here: Parliament publishes no API for written evidence, so the button above opens the committee’s page.

What you send is published under your name and can be quoted in the committee’s report. Keep it under 3,000 words, send it as a document rather than a letter in the body of an email, and answer the questions above rather than writing generally.