On 12 December 2017, ASIC released a review of its regulatory sandbox. The review proposes to retain ASIC class waivers (known as the fintech licensing exemption) introduced to allow financial technology (fintech) businesses to test particular services, without holding an Australian financial services or credit licence.
ASIC's consultation paper may be accessed here.
Currently, the fintech exemption allows eligible businesses to test specified services for up to 12 months with up to 100 retail clients, provided that they meet certain consumer protection conditions and notify ASIC prior to the commencement of business. The exemption is intended to reduce barriers to innovation by allowing new businesses to test their services in an environment with a reduced regulatory burden. Viability of innovative financial services and credit services can be tested, before the regulatory costs of running such a business are incurred.
In the year since the introduction of the fintech licensing exemption, four fintech businesses have utilised the exemption and over a dozen fintech businesses contacted ASIC about using the exemption. The review now seeks feedback on the retention of the exemption, and is being undertaken in line with Treasury's consideration of feedback to its draft legislation relating to the Government's proposal to enhance the regulatory sandbox, which would extend the scope of the fintech licensing exemption.
The consultation period will close on 27 February 2018.
It is pleasing to see ASIC continuing to support innovation in Australia, and we are hopeful that fintechs will be encouraged to consider the opportunities that arise from the flexibility of ASIC's existing regime.
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