How the new sandbox system for fintech projects works

The derogation that allows innovative projects in the financial sector to be tested in the field with more favorable conditions is starting from 17 July

Fintech ecosystem Abstract vector created by macrovector - en.freepik.com The regulation for the fintech sandbox is reality: the implementing decree of the Ministry of Economy and Finance (Mef) was published in the Official Journal, thus implementing the delegation envisaged since the 2019 Growth decree. The text designates the composition and prerogatives of the fintech committee set up at the Mef, as well as list the conditions, methods and scope of the experimental regime in the field of "techno-finance". The text signed by Minister Daniele Franco was drafted after consultations with the Bank of Italy, the National Commission for Companies and the Stock Exchange (Consob) and the Insurance Supervisory Institute (Ivass).

The representatives of three supervisory authorities will be part of the committee, chaired by the ministry, together with colleagues from the Antitrust Authority, the Privacy Guarantor, the Digital Italy Agency and the Revenue Agency. One of the tasks of the body will be to facilitate the contact of operators in the sector with institutions and authorities, by comparing risk areas and exchanging information, given the evolutionary nature of the trials. The so-called "sandpit" will be able to enter innovative activities that aim to provide services and products in the banking, financial or insurance sector, using new technologies, "that are really new and different from what is already present on the national market".

How the sandbox system works

The experimental aspect of the sandbox at a regulatory level is guaranteed in article 14 of the text, which admits the possibility that the competent authority may derogate from its own regulations, to a supervisory orientation or an act of a general nature "providing alternative criteria for compliance with the law", where this eventuality is furthermore considered as a criterion for the eligibility of the activity to the sandbox program (article 6), " modality in which it is proposed ". The progressive nature is then made explicit in article 17, providing for the possibility that the competent authorities may initiate the investigation to change their regulations in order to "allow activities to be carried out even outside the trial", in the event that this "has given a positive outcome and the continuation of the activity being tested requires regulatory changes".

Among the prerequisites for eligibility, projects must be able to bring "added value" through benefits to end users or improve the efficiency of the banking, financial and insurance system, facilitate the application of regulations , improve systems, procedures and processes, be economically sustainable. The authorities will be able to establish time windows of two months in which to admit a predetermined number of projects, for certain “vertical” areas of fintech innovation. The maximum duration of the trials may be eighteen months, with a possible extension to be requested 60 days before the deadline, with report and motivation.

Controls

Among the various documents requested together with the application for admission, there must be a preliminary feasibility study (proof of concept) and an indication of the tools to protect users which must include at least correct information on the experimental nature and duration of the project, mechanisms for collecting informed consent, right of withdrawal with at least 15 days notice without expenses or penalties, quick compensation mechanisms in the event of the service provider's liability.

The authorities will be able to modulate the scope of the trial, provide for limits on operations, companies other than those provided for by the consolidated act of banking and credit laws, revoke admission. The subjects introduced to the experimental regime, monitored every six months by the competent authorities, will be entered in a special register, which will be published on the website of the committee. At the end of the experimentation, an economic and operational report will be prepared by the subjects, while the competent supervisory authority will be able to point out any opportunity for "regulatory changes or interpretative clarifications of the legislation, including regulatory, in force, in light of the evolution of technology ". The implementing decree for the fintech sandbox system will come into force on July 17.


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Topics

Finance Fintech Digital payments startup globalData.fldTopic = "Finance, Fintech, Digital payments, startups "

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