New steps aimed at making it easier for UK firms to innovate and test their products safely have been announced by the UK’s FCA.

The watchdog has also said it will make it easier for new firms to gain regulatory approval in the future, so that they can invest or secure funding with more confidence.

In a press release, the regulator said: “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. This will help the right firms get authorised and bring innovative products and services to market faster.”

As part of the new programme, the FCA said:

• The pre-application support service will now be extended to cover all wholesale, payment and crypto firms.
• A new innovative market for private firms will work closely with the industry to help those firms scale up and grow.
• investors will find it easier to invest in private companies with support from the Private Intermittent Securities and Capital Exchange System (PISCES).
• The FCA’s AI Lab will work with firms to better understand and enable the use of AI technology in the UK financial system.
• The regulator will also let more firms know, in advance, that their application for regulatory approval is ‘minded to approve’, allowing them to secure funding more confidently.
• A new regulatory framework will be established to help consumers make better and more informed decisions about their financial lives.
• The FCA will now also regulate all Buy Now Pay Later (BNPL) products.
• A new data-led detection capability will be built “to increase identification of financial crime and take action to tackle it.”

Smarter regulator

Nikhil Rathi, chief executive of the FCA, said the new steps are part of the regulator’s ambition to work more smartly and deliver on the key objectives of supporting growth, supporting consumers and fighting financial crime.

The announcement is the latest in a number of recent steps by the regulator aimed at cutting regulatory red tape and supporting the government’s growth agenda.

Advanced technologies, including AI, are a key component of the government’s blueprint to innovate its way towards financial growth and market stability.

In January, Prime Minister Kier Starmer announced a new plan to “unleash” AI across the country to start and deliver a decade of renewal, as part of the government’s Plan for Change.

The government said at the time the measures “will make the UK irresistible to AI firms looking to start, scale, or grow their business.” It will also establish the UK as a global leader in AI.

Other recent growth-supporting proposals by the FCA include:

• “Establishment of a new Private Intermittent Securities and Capital Exchange System (PISCES) on which shares in private companies will be bought and sold. 
• “Helping a wider range of companies to list on a UK exchange.
• “Making it cheaper and easier for companies to raise money in the UK.
• “Giving asset managers greater freedom in how they pay for investment research.
• “Opening the Digital Securities Sandbox so firms can test innovative new technologies
• “Delivering a plan for regulating crypto assets.”