Speaking at a Finsia ‘Regulators Panel’ event in Sydney, Mr Medcraft pointed out that innovative business models often do not “fit” into existing regulatory frameworks.
“It’s really important we rethink the way we regulate [financial services companies] in a digital economy,” he said.
Mr Medcraft said Australia should adopt a more flexible or ‘agile’ approach to regulation, as is seen in other parts of the world.
“In countries like China there is an emerging ‘two-tier’ or more proportional approach [to regulation],” he said.
A two-tier approach divides companies into either a “too small to really care” category (which receives “lower lever, lighter regulation”) and a “too big to ignore” category.
New tools that rely on the internet, customer feedback and social media should also be harnessed to regulate emerging fintech companies, Mr Medcraft said.
“You’ve got to think about how you feed that back into regulation and laws,” he said.
“Social media feedback or feedback on technology – that in itself is actually a strength and a control that can’t be ignored. That power of the crowd is absolutely fascinating.”