‘Ohio’s Regulatory Sandbox’ is open for play

The Ohio Department of Commerce Division of Financial Institutions (DFI) has officially launched Ohio’s Regulatory Sandbox program. Inventive entrepreneurs in the banking space will be allowed to test products with careful oversight, such as consumer loan products or money transmission services before further expansion.
 
These types of products incorporate new or emerging technology, or reimagine the use of existing technologies, to address a problem, provide a benefit or otherwise offer a product, service, business model or delivery mechanism that is not widely available to consumers.
 
A financial product or service cannot be a securities product or an insurance product. Existing regulatory requirements are adjusted to provide applicants the opportunity to offer and test new products and services in a “live” environment, for a trial period up to 24 months, without the usual licensing process.  

As part of the application review process, DFI plans to take into consideration a variety of factors, including the consumer protection measures proposed by the applicant. Additionally, for successful applicants, DFI has the authority to impose restrictions or limits on the testing, which can include dollar limits, number of customers, etc.
 
“DFI has the authority to monitor the performance of Sandbox participants. These measures are all designed to minimize, as much as possible, the risk to any customer. However, with any financial product or service — especially one that is novel and untested — there are going to be potential risks,” said Superintendent Kevin Allard.
 
In addition, the statutorily mandated disclosures that must be provided to all customers include the disclaimer that “the State of Ohio does not endorse or recommend this product or service.”
 
Participants do not have to reside in Ohio but must agree to be subject to the jurisdiction of Ohio courts. Participants also must have a location in the United States, whether physical or virtual, from which testing will be developed and performed and where all required records, documents and data will be maintained.
 
Prospective applicants are strongly encouraged to submit a request for a Sandbox Pre-Filing Conference before applying to Ohio’s Regulatory Sandbox, so that DFI may learn about the business model of the prospective applicant and determine whether the innovative financial product or service is appropriate for the Sandbox. The application form, fees, and instructions for applying to Ohio’s Regulatory Sandbox can be found at https://com.ohio.gov/divisions-and-programs/financial-institutions/sand…, along with other FAQs.
 
For general inquiries, please contact (614) 644-6530 or WebDFISandbox@com.ohio.gov. If a consumer experiences any issues regarding Sandbox products, the consumer can file a complaint with the Office of Consumer Affairs.