16 Jun 2021

CMS becomes second law firm to participate in UK's long-running fintech regulatory sandbox

Collaboration with digital startup wins admission to seventh cohort of FCA scheme

Sam Robinson (left) and Tom Jameson

CMS has been selected by the UK’s Financial Conduct Authority (FCA) to participate in its regulatory sandbox aimed at driving innovation in the fintech sector. 

The firm is one of the 13 successful applicants joining the FCA’s sandbox as a member of its seventh cohort. It was admitted to the project in collaboration with client Valk, a digital transaction startup, from a pool of 58 applicants from the UK and overseas. 

As part of the latest cohort, CMS will provide Valk with legal advice on ‘corporate and intellectual property issues and other areas’ during its tenure in the sandbox. 

CMS is only the second law firm to be selected for the sandbox since it was launched in 2016. The first was DLA Piper in 2020, when the firm participated in the sixth cohort to develop its regtech solution related to the digital management of regulatory compliance for the issuance of digital assets, according to the FCA’s website. 

Tom Jameson,a  CMS corporate partner, said the firm’s inclusion in the sandbox was a reflection of its “deep sector knowledge” and expertise operating in the fintech market. 

Sam Robinson, a CMS financial services regulatory partner, said: “Successful sandbox applicants are required to demonstrate ground-breaking or original innovation with identifiable consumer benefits. The success of CMS and VALK’s collaborative application demonstrates the firm’s position at the very centre of developments in the regulatory space,” 

This year, the FCA saidit was on the hunt for firms developing solutions fit for adapting to life in the post-Covid world, with a focus on innovation and testing for firms developing businesses, products or services related to fraud detection, consumer support, and improving access to finance for SMEs. 

Notable past sandbox participants include several banks, including Nationwide, Barclays, Natwest and HSBC’s telephone and internet-based banking arm First Direct. While the project currently runs on a cohort basis, the FCA said it hopes to move to an ‘always open’ model later on this year, making admission to the sandbox possible year-round. 

Following its successful launch in 2016, the sandbox was credited with kickstarting the UK’s burgeoning fintech sector by allowing the testing of new products in a controlled environment and has since inspired the creation of similar projects, including the LawTech Sandbox, a government-backed initiative aimed at driving innovation in the UK legaltech space.

Last November, the FCA also spearheaded a separate 11-week ‘digital sandbox’ pilot for City firms, aimed at testing a suite of tools to support early-stage innovation. 

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