The UK's Financial Conduct Authority (FCA), with 11 other regulators across the world, has announced a consultation into a Global Financial Innovation Network (GFIN).  This is the next step following on from the FCA's proposal earlier this year to create a global sandbox.  

In the fintech context, a "sandbox" generally means some form of safe space to test innovative products, services, business models and delivery mechanisms.  However, the proposals in the consultation paper go beyond a cross-border sandbox (although that is one of the main functions of the GFIN).  The other main functions of the GFIN are:

  • to set up a global network of regulators, to promote information and knowledge sharing on emerging innovation trends, their own local experimentation, tests and initiatives, and the provision of accessible contact information for firms. This should benefit fintech firms looking to provide services in other jurisdictions - it can be difficult to know where to start in a new jurisdiction, but one of the things which the GFIN should be able to facilitate is discussions with multiple regulators, building on the existing referral framework in bilateral agreements; and 
  • to facilitate joint policy work – collaboration between regulators on key policy questions to inform the approach taken by regulators, with a view to supporting the work of standard setting bodies. The paper notes that this could also include regulators collaborating on regtech solutions.

We have, of course, already seen Fintech tie-ups between different regulators on a bilateral basis (see here, here and here for just a few examples of FCA cooperation agreements), but this is somewhat broader, given the multilateral nature of the network. One example where the multilateral approach would be particularly beneficial is the reference to identifying the areas of divergence and providing a mechanism and forum for policy discussions between global regulators.  This wouldn't just be of benefit to fintech companies looking to provide services globally, but the regulators see this as an opportunity to reduce the potential for regulatory arbitrage. 

It was also great to see financial inclusion included as part of the proposed mission statement of the GFIN (see below). Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs, and this has been one of the areas which the FCA (and others) has been focussing on with its Fintech efforts. In its "lessons learned" report (October 2017), the FCA said that it would welcome applications to its sandbox which include propositions that directly seek to address public and social policy issues and the Fintech section of the FCA's business plan for 2018/2019 expressly references the risk of harm to vulnerable customers and expects firms to develop plans to deal with those who are more vulnerable.  This is one area which should clearly be at the forefront of minds when developing any Fintech product or service.  

Comments are requested on the consultation paper by 14 October 2018.  Feedback can be provided by email ( - this will be shared among the regulators listed in the paper, unless specifically stated otherwise.