Businesses will be able to test innovations in financial technology (fintech) in a live customer environment in Australia under proposed changes to legislation in the country.

Plans for an "enhanced regulatory sandbox" were outlined by the Australian Treasury on Tuesday.

According to the proposals, businesses will be able to benefit from "conditional exemptions" from existing financial services and/or credit licensing requirements for up to two years while they test new financial and credit products.

The measures are designed to support innovations in fintech, the Treasury said in an explanatory document issued alongside the proposed new legislation.

"The purpose of the [new exemption regulations] is to create a 'regulatory sandbox' to encourage and support the design and delivery of new financial and credit services that will benefit consumers and businesses," the Treasury said.

"The regulatory sandbox will help overcome regulatory burden and cost that may hinder businesses in developing innovative offerings. The regulatory sandbox will enable fintech firms to bring innovative services and products to market faster and at lower cost, while still providing for important consumer outcomes such as dispute resolution and consumer compensation arrangements," it said.

The Australian Securities & Investments Commission would have the power to apply conditions that businesses would have to adhere to benefit from the regulatory exemptions and participate in the new sandbox scheme.

Regulatory sandboxes designed to support growth in fintech have already been introduced in other jurisdictions, including the UK, Bahrain, Dubai and Singapore.

Recently, the UK's Financial Conduct Authority (FCA) published statistics that show that its regulatory sandbox is helping firms to attract investment for their innovations.

The FCA said that at least 40% of firms that had completed testing in the first round of sandbox testing had "received investment during or following their sandbox tests". The regulator also said that around 90% of the firms that participated in its first round of sandbox testing "are continuing toward a wider market launch following their test".

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