Spain gives greenlight to the law creating a “Regulatory Sandbox”
The Spanish Council of Ministers approved the draft bill on the “digital transformation of the financial system” (the “Draft Bill”) on 22 February 2019.The Draft Bill will be introduced in the Parliament for debate. The Draft Bill aims to create legal environment which will foster digital financial innovation while protecting the consumers. Among others, it creates a “regulatory sandbox” for businesses to test out new products or services.
- Purpose: Conceptually similar to a children’s sandbox, a regulatory sandbox is a controlled and supervised environment where fintech or financial companies may test their new products and experiment without the risk of infringing on regulatory requirements.
- Supervision: The National Bank (Banco de España), the National Securities Market Commission (CNMV), and the Directorate-General for Insurance and Pension Funds will exercise their supervision over this regulatory sandbox.
- Eligibility criteria: To qualify for the sandbox, companies will need to apply and meet the eligibility criteria, which includes standards such as innovation through regulatory compliance, increased market efficiency, enhanced quality of or access to financial services, or better market supervision.
- Protocol: Once a company is authorised to participate in the sandbox, it will need to work with the competent regulator to implement an appropriate protocol.
- Protections: Participation in this sandbox shall ensure the protection of personal data, protection of consumers, and the prevention of money laundering and terrorist financing.
- Liability: The clients participating in the test projects will be required to give their informed consent in writing. Despite such consent, promoters will be exclusively liable for any damages suffered by the participants.
- Benefit: Those companies that have participated in the regulatory sandbox will be able to benefit from a faster authorisation procedure to fully operate.
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