Theory and practice of regulatory sandbox in the context of Fintech -Part 9

Third, the regulatory sandbox relies heavily on two-way interaction based on a case. The regulatory sandbox is an experiment for test companies, and it is also an experiment for regulators. It is not only an experiment of financial technology and financial innovation, but also an experiment of regulatory technology and regulatory concepts. Therefore, mutual trust and good communication between regulators and test companies are essential. Whether it is the authorization conditions tailored for fintech companies, the non-enforcement action letter and individual guidance issued to traditional financial institutions, or the different forms of safeguard measures taken to protect the interests of consumers, it needs to be agreed upon by the "cat" and "mouse" one by one based on the specific situation, so they have a strong case-by-case nature and flexibility.

Finally, the regulatory sandbox has obvious applicable boundaries and limitations, which are mainly reflected in rule exemptions and access conditions. As far as rule exemption is concerned, FCA's exemption power is subject to the inspection standards stipulated in the Financial Services and Markets Act, and cannot be exempted from regulatory requirements derived from EU law. As far as access conditions are concerned, sandbox companies must meet relevant authorization conditions before they can actually carry out corresponding financial activities. Although the conditions for limited authorization will be “proportional” to the testing activities as mentioned above, it is only moderately simplified and the threshold still exists, which makes it difficult for companies that want to test certain business models to achieve the initial regulatory requirements for authorization.