FMA launches “regulatory sandbox” pilot for 2025

Image: Daniel Trinder, FMA Executive Director, Strategy & Design

As part of our commitment to support financial services innovation, the FMA is launching a pilot “regulatory sandbox” and is asking for applications from interested parties. 

A regulatory sandbox is a concept which allows firms to test innovative products, services or business models.  An initial pilot phase will run from January to July 2025, with a decision on the need for a permanent FMA regulatory sandbox to be made later in the year. 

This pilot will be open to all parts of the financial sector that come under the FMA remit and can include both new entrants and those firms already with a market presence.  

The pilot is also open to more than just regulated financial services, and can include products or services that, for example, simplify compliance solutions, or use blockchain or regulatory technologies. 

Sandboxes can help spur innovation by allowing both startups and established licensed financial institutions to test new products and services in a controlled environment.

Firms can test their systems in a monitored space, allowing them to obtain a deeper understanding of supervisory expectations. The opportunity to adjust a product or service before full commercial launch may help reduce costs for firms. 

In return, the FMA has the chance to gain greater insights into the benefits and risks of financial innovation and new technologies. By first testing a product or service in a regulatory sandbox, we should be able to better assess the viability of innovative products and services.  

Experiences gained through such a testing phase should allow the FMA to react faster and more effectively to regulatory and supervisory problems. It should also highlight gaps around investor and customer protection, allowing development of more appropriate and timely solutions.  

The FMA is very grateful for the constructive work and support from FintechNZ and its members ahead of this launch. We are now asking for expressions of interest from firms interested in joining the sandbox pilot over the next six months.  

We are also welcoming applications from those firms bringing new products to market outside of this six-month window, which will help us build a forward-looking perspective on potential demand. 

For this initial phase we are looking for firms who: 

• Have a product ready to be tested in the New Zealand market with customers. 

• Understand what aspects of existing financial regulation apply to their product or service. 

• Have considered where they need guidance from the FMA and why participation in the sandbox will help to their ‘go to market’ plans. 

To participate in the regulatory sandbox, firms will have to apply to the FMA. We will examine whether the application meets the criteria for participation, such as what barriers the firm is facing in bringing their product to market, whether these are areas that the FMA can influence and the need and readiness of the firm. This information will be used to help decide whether to accept the firm for testing in the 2025 pilot. 

Please complete the Regulatory Sandbox expression of interest form

Please complete the expression of interest form above or contact FMA Technical Specialist, FinTech & Innovation Alan Crofts for more information.  
 
You can reach Alan at [email protected] or 027 283 3859