The Financial Conduct Authority is set to ramp up the industry's fight against scams and fraud amid the coronavirus outbreak, making this a key theme of its latest regulatory sandboxes.
The regulator opened applications for two sandboxes today (October 5) with a particular focus on supporting new products and services which could help consumers and firms tackle challenges compounded by the pandemic.
The FCA has placed emphasis on applications which will prevent fraud and scams, support the financial resilience of vulnerable consumers and improve access to finance for small and medium sized firms.
The FCA's sandbox allows firms to test products and services in what is intended as a controlled environment and on a small scale, with the process being overseen by the watchdog.
It follows warnings from the industry and the regulator itself that fraudsters would use the pandemic as an opportunity to target victims at a time of uncertainty, with an increase in scams already materialising this summer.
Alongside the seventh cohort of its regulatory sandbox the FCA also opened applications to the pilot of its digital sandbox, which it accelerated in the summer in a bid to support firms during the coronavirus outbreak.
The digital version of the sandbox is intended to test products at an earlier stage of production, before they are ready to be presented to consumers or a live environment.
It could see the FCA use simulated or synthetic data instead of testing products and services in the real markets, which would speed up the process of firms launching solutions to help consumers during the pandemic.
Nick Cook, director of innovation at the FCA, said the regulator was a "strong believer in the positive power of innovation".
He added: "Today we are strengthening the range and scale of support we are providing to innovative firms to deal with the challenges raised by the pandemic.
"As a regulator we recognise the need to continually experiment and learn in order to stimulate innovation.
"We are excited to launch this new service and by the lessons it will provide for future iterations of the initiative."
Last month figures from UK Finance showed impersonation scams had almost doubled in the first half of 2020 as criminals looked to exploit the pandemic.
Earlier this year the FCA warned of "sophisticated and opportunistic" scammers looking to capitalise on the confusion surrounding the coronavirus outbreak and in July, professional body the Personal Finance Society said the pandemic was leading to new types of fraudulent activity.
rachel.mortimer@ft.com
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