| Link(s): | Ten years of FCA innovation: impact and opportunity | FCA 10-Year Anniversary: FCA Innovation Services | FCA 10-year anniversary: FCA Innovation Services Our innovation services | FCA |
Context
The FCA has published a speech delivered by Jessica Rusu, FCA Chief Data, Information and Intelligence Officer, at the FCAs Innovation 10th anniversary event. It has also published a supporting web page (referencing its Innovation Services web page) and an FCA Innovation Services 10 year anniversary report which provides an overview of the firms the FCA has supported alongside case studies on a sector-by-sector basis.
Innovation plays a vital role in growth and competitiveness of UK financial services and the FCA endeavours to ensure beneficial innovation can flourish while maintaining its commitment to safeguarding consumers and the stability of the financial system. The FCA is creating the right environment for firms to flourish and grow, and for the UK to remain a great place to be an innovator.
Key points to note and next actions
The FCA launched ‘Project Innovate’ in 2014 in a world first, and its approach has been copied around the world. During the 10 years:
- The FCA received over 2,500 applications and supported almost 1,000 firms.
- 25 firms have accessed the Digital Sandbox, developing proof of concepts using data related to fraud, the Financial Services Register and open finance.
- An independent study found that Sandbox firms are 50% more likely to raise funding than their peers and, on average, raise 15% more in investment.
For general insurance, the report highlights that:
- There have been 190 applications relating to insurance. The volume of applications received varied over the years, reaching peaks in 2016 and 2019
- The FCA has supported applicants from around the world including the US and China, though most are from London (55%) and the rest of the UK (32%). As with other sectors, most have been small firms.
- The FCA accepted: 52% of applications for support in total; around 20% were approved for testing in the Regulatory Sandbox and around 78% for Innovation Pathways.
A case study for insurance set out that Laka (previously Insure A Thing) developed an alternative insurance business model for bike insurance with innovative and capped pricing linked directly to the claims experience in the previous month. The firm came to the FCA with a specific regulatory question around whether they would be a Managing General Agent (MGA) or would sit within consumer finance. The FCA supported the firm with an informal steer to help them identify the applicable regulated activities, which enabled them to apply for a restricted authorisation and obtain greater regulatory certainty ahead of Regulatory Sandbox testing. The firm is now authorised without restrictions and delivering their proposition on a larger scale.