A joint report has recently been published by the European Supervisory Authorities (ESAs) on innovation facilitators, such as regulatory sandboxes and innovation hubs. The report, which is a result of a mandate derived from the 2018 FinTech Action Plan, undertakes a comparison of the innovation facilitators established within the EU. This analysis has formulated a number of best practices with regards to the design and operation of innovation facilitators. There are currently 21 EU Member States and 3 EEA States which have established innovation hubs and 5 EU Member States which have regulatory sandboxes in operation.
Innovation hubs provide a dedicated point of contact for queries which may be raised by companies with the competent authority on matters relating to FinTech, as well as for requesting guidance on certain related matters. Regulatory sandboxes on the other hand provide a scheme for companies to test innovative financial products, financial services or business models.
The report establishes that the reported innovation hubs share similarities with respect to their overall objectives and scope. They however differ in certain areas such as the means of interaction between the competent authorities and firms, the type of advice and assistance provided, as well as record keeping and clarity of outcomes.
The best practices established through the report are intended to promote uniformity in the design and operation of innovation facilitators within the single market, to promote clarity of regularity and supervisory outcomes which may arise from interactions in relation to innovation facilitators, as well as to facilitate collaboration between national authorities, including consumer and data protection authorities. Moreover, the ESAs also established possibilities for consideration in relation to EU level work on innovation facilitators to foster collaboration between innovation facilitators. This would also provide for the improvement of FinTech throughout the single market.
The best practices suggested within the report range from pre-establishment principles concerning the fulfilment of specified analysis, to operating principles for both types of innovation facilitators.
This report is thus another step in the right direction at an EU level to establish a comprehensive union position in FinTech and related areas.
Article by Dr Cherise Abela Grech
This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.