Who may submit an application for admittance to the sandbox?
FinTechs or supervised institutions with FinTech business models or FinTech cooperations that meet all the conditions set out in Article 23a para. 2 FMABG.
Are there costs associated with the sandbox?
No fees arise during the process for admittance. Fees arise in the case of administrative decisions being issued – and are based upon the FMA’s standard charge rates, especially for an administrative decision granting a licence. More detailed information about the FMA’s fees can be found here.
What happens if during the test the scenario for a permanent supervised activity is no longer realistic or desired?
The entity may request to exit the sandbox at any time, and the evaluation and exit phase 4 of the sandbox is then initiated.
Must a lawyer submit the application?
There is no general obligation to use a lawyer throughout the entire procedure. Consulting the legal profession and making use of legal services to prepare the enquiry may however save both time and expense. Particular for new services, classification under supervisory law is often complicated. Well structured considerations about the criteria for admittance to the sandbox, and subsequently for finding a suitable test scenario for the entity, are helpful.
Can the sandbox be used for advertising purposes?
A transparent and non-misleading external appearance is to be observed throughout the entire procedure. It is not possible to advertise the business model using an FMA “seal of quality”. It would also be misleading to already offer the prospect of a licence, before one actually exists. The commitment of the sandbox means that both sides must be cautious in dealing with existing reputational risks. Ambiguities or exaggerated reporting are misplaced. The FMA will inform the public about the business model and the sandbox participant prior to the test starting. Operational or trade secrets must be protected.
What requirement must officials already meet for the test licence? Must fitness & propriety be ensured, or the requirement satisfied of the position being someone’s main occupation?
The entity must observe all requirements that are prescribed under law as compulsory in a licensing procedure, such as technical suitability or the requirement that the position is the main occupation for at least one director of a payment service provider under the Payment Services Act 2018 (ZaDiG 2018; Zahlungsdienstegesetz 2018). No provisions are allowed to be suspended in the sandbox, or not to be applied at the discretion of the FMA. Room however remains for the application of proportionality within these legal requirements e.g. a Fit & Proper test for directors. The extent to which the senior management must be fit & proper depends on the scope and nature of the activity during the test phase.
What own funds does the entity require in the sandbox?
The legal minimum requirements for granting a licence under the respective supervisory act, must also be met for a licence in the sandbox. For example, Article 16 para. 1 ZaDiG 2018 stipulates Common Equity Tier 1 of € 125,000.00 for operating a payment instrument business or a payment business. Furthermore, payment institutions are required pursuant to Article 17 para. 1 ZaDiG 2018 to have sufficient own funds at all times. This is dependent on different calculation methods in relation to the nature and scope of the business activity e.g. from the payment volume that flows through the payment institution. For a licence, generally substantially higher own funds are required to be held than are compulsory in the provisions on initial capital. To what extent adequate own funds are specifically to be held, is to be evaluated on a case-by-case basis for the test phase. In drawing up the test parameters together with the entity, consideration is given for example whether limited operations with a low number of customers and transactions are initially aimed at. The specific own funds requirement is also based on this factor.
How long does it take for a decision is made about an application for authorisation?
If all conditions for the application are fully met pursuant to Article 23a para. 2 FMABG and the opinion from the Advisory Board of the Regulatory Sandbox has been received, then the FMA is required to decide about the application within six months.
How long to the individual phases of the sandbox last?
You can find out about the four phases of the sandbox here.
Participation in the sandbox is limited overall to a maximum of two years. However, there is no specifically prescribed duration for the individual phases.
Are there specific times to apply or a deadline for doing so?
An application may be submitted at any time.