The FCA will unveil a regulatory ‘nursery’ for fintechs this Autumn, after taking on the Kalifa Review’s recommendation for a ‘scalebox’.

Chancellor Rishi Sunak recently announced the regulator would be taking this work forward as part of Project Innovate to encourage the development of fintech companies.

The argument for this is that newly-authorised firms still require higher levels of support from regulators and often enhanced oversight as part of this.

In a speech marking national ‘fintech week’, FCA chief executive Nikhil Rathi said: “This [nursery] will create a period of enhanced oversight as those newly authorised firms develop and grow used to their regulatory status.

“Currently, firms gain regulatory status and are treated in the same way as a firm with a long track record. The regulatory nursery will keep us in close contact with firms immediately post-authorisation so we can provide support and, where we need to, intervene earlier to steer firms in the right direction.”

In his speech the Rathi also touched upon the work the regulator was carrying out to try and better protect consumers online.

Rathi reiterated that the government needs to provide better financial protection for consumers online, but also fired a warning shot at companies involved in digital marketing of financial services products and services.

He said: “Ultimately, online search and social media firms need to take greater responsibility for their role in connecting consumers with these investment offers.

“We see no reason why different standards should apply to a search engine or social media compared to a newspaper. If these platforms choose to display and profit from adverts for risky – and in some cases fraudulent – investments, they should also comply with financial promotions rules.”

Elsewhere, the FCA is enhancing its regulatory sandbox.

Since its launch, 137 firms have passed through the sandbox which allows products and services to be tested in a safe environment before reaching the wider market.

The regulator will shortly begin allowing year-round applications for the sandbox and ramp up advertising for this.

Rathi added: “We will help connect scaling entities with our international peers, through the Global Financial Innovation Network, which now includes over 60 organisations committed to supporting financial innovation in the interests of consumers.

“We will support scaling firms’ entry and growth in other markets and further develop cross-border testing of innovative products and services.”

This will include refining the digital sandbox, piloted in 2020, to focus on sustainability. A partnership with the Corporation of the City of London will support this.