This fall, three financial services regulators—the US Consumer Financial Protection Bureau (“CFPB” or “Bureau”), the US Office of the Comptroller of the Currency (“OCC”) and the UK’s Financial Conduct Authority (“FCA”)—released information about recent developments in their respective efforts to facilitate responsible financial innovation. First, on October 23, the CFPB released a report describing its accomplishments since the launch of its development initiative, “Project Catalyst,” four years ago this month. Three days later on October 26, the OCC announced that it is establishing an Office of Innovation and implementing “a formal framework to improve the agency’s ability to identify, understand and respond to financial innovation” in the banking industry. Finally, on November 7, the FCA marked the second anniversary of its financial innovation program—Project Innovate—by releasing the first list of companies approved to participate in the agency’s regulatory sandbox, i.e., a “safe space” in which businesses can test innovations in an environment designed to protect consumers.
This Legal Update summarizes these developments and offers predictions on what the industry can expect in this space during the coming months.