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Latest news about the regulatory sandbox – what it is, and what it’s not

The deadline for applying to the regulatory sandbox, is approaching fast. NCE Finance Innovation invited Finanstilsynet to tour Norway, starting in Oslo before visiting Bergen, Stavanger and Trondheim, to answer questions and clarifying any misconceptions about the sandbox.


By: Håkon Lavik

Finance and fintech are highly regulated markets requiring permits, authorisation and compliance to laws which may not be suitable for innovations in uncharted territory. In other words, it’s difficult being an outsider trying to navigate these shark-infested waters. With the regulatory sandbox in place, Finanstilsynet wants to make market entry both easier and more accessible. The Norwegian program is developed based on experience from early adopters of other sandboxes, such as Denmark The Netherlands and UK.

So what is the regulatory sandbox, and what is it not?

The sandbox is an opportunity for startups and corporates alike to try out new solutions, products or technologies in cooperation with Finanstilsynet. Firstly, Finanstilsynet will be able to answer questions about which kind of concessions you need and how to apply efficiently. Tilsynet can also work closely with companies to create a framework to test solutions in the market early on with real customers and real transactions. Furthermore, it can provide input to develop the government’s understanding of new technology to better align laws and regulations with reality in the future. While Finanstilsynet can’t change the laws directly, they are in a position to suggest changes to the Treasury based on feedback from the sandbox program.

During the process of establishing the sandbox, we have experienced that it may also serve as an arena for closer dialogue between the supervisor and businesses.

- Knut Haugan, Senior Advisor at Finanstilsynet

What it’s not:

The sandbox does not offer a physical test-facility, technical infrastructure or technical know-how, meaning the accepted companies must be ready to start testing from the get-go. Being accepted to the sandbox is not a seal of approval and does not mean that the company its better suited than competitors outside of the sandbox. This means that companies should not apply just as a marketing trick, you need to have an actual reason for joining the program. Lastly, being a part of the sandbox does not grant you immunity from following the same laws and requirements as any other company.

 
 Knut Haugan speaking about the regulatory sandbox in SpareBank1 SMN’s headquarters in Trondheim. Photo: Håkon Lavik
Knut Haugan speaking about the regulatory sandbox in SpareBank1 SMN’s headquarters in Trondheim. Photo: Håkon Lavik
 

Cross-sectional sandboxes

The regulatory sandbox is in dialogue with other authorities such as Datatilsynet, but they are not formally collaborating in the sandbox program. This is the case in many other countries as well, not just in Norway. However, efforts are being made internationally to create cross-sectional sandboxes combining different regulatory bodies. It’s a known issue that companies today may have to deal with several different sandboxes to launch their product in the market. Going forward Finanstilsynet will continue working to develop appropriate models and relations to other governmental agencies. Hopefully starting with the financial dimension one can create the knowledge and foundation needed to expand in the future.

Deadline to apply: 12. February 2020

Read more about criterias for applying at finanstilsynet.no.

Watch the video from Finanstilsynets seminar on the regulatory sandbox and PSD2 from 23. January 2020 here (in norwegian):