A bill pending in the N.C. Senate would tear down burdensome regulations for 24 months for companies offering new financial or insurance products that use emerging technology, allowing them to test out cutting-edge products or services.
Senate Bill 470 would establish a “regulatory sandbox” similar to one created in Arizona in 2018. The measure would waive certain regulatory obstacles for a trial period for fast-emerging products and services.
“This is an exciting opportunity for North Carolina,” said Sen. Todd Johnson, R-Union, the bill’s primary sponsor. “It positions North Carolina in the United States for innovation among startups and incumbent stakeholders. I firmly believe this bill is a major step forward in making North Carolina fertile soil for companies to call home.”
S.B. 470 would establish a new Innovation Council to market the program and seek and review applications. The Council would evaluate applications based on level of innovation, potential consumer risks, the level of consumer protections and complaint resolutions in place, and level of business plan and capital. It would then make recommendations and pass them along to the state agencies ultimately responsible for the final decision.
“The idea of a regulatory sandbox is to strike a balance between protecting consumers from bad products and services and helping consumers with more choice, competition, and emerging products and services,” said Jon Sanders, research editor and senior Fellow, Regulatory Studies, at the John Locke Foundation.
“Existing regulations can be burdensome, but they can also be particular obstacles to new ideas, and they can become entrenched and backward-thinking,” Sanders added. “At their best, regulations protect consumers, but sometimes they can protect old ways and resist innovation. When that happens, consumers end up worse off, and so does the economy.”
S.B. 470 passed out of the Senate Finance Committee on Wednesday, June 9, without opposition.