ASIC to implement a ‘regulatory sandbox’ for fintechs
(9 June 2016 – Australia) Australia’s corporate regulator has said that it will work to allow fintech startups to test their ideas in the “real world” for a six month period without needing to hold an Australian Financial Services Licence (AFSL)
The "regulatory sandbox" was proposed by Treasurer Scott Morrison in the May budget, and further details announced in a consultation paper released early June.
The Australian Securities and Investments Commission (ASIC) said the creation of the sandbox will allow financial services startups to attract investment and get to market faster by providing "limited testing and concept validation to occur without businesses needing to comply with all the usual regulatory obligations".
The Federal Government had suggested creating the sandbox as part of a plan to build a technologically driven innovation-based economy. Further, the Treasurer said that fintechs can act as a driver of microeconomic reform, helping to boost productivity and competition in the banking and financial services industry and potentially boost Australian service exports to Asia.
New players in the financial services space are experiencing difficulty with bringing new ideas to market quickly and determining existing skill gaps, which impacted their ability to attract capital.
"Although there is significant flexibility within the current regulatory framework, we consider that the issues and challenges faced by innovative start-up businesses may warrant additional measures," ASIC said.
In the statement, ASIC added that its new AFS licensing exemption would help increase competition by removing the barriers to entry and allow for faster development and business model changes, ultimately benefiting consumers.
Public comments on the paper are due by July 22. The regulatory guidance and licensing exemption would be finalised by December according to ASIC.
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