Since December 2016, the Australian Securities and Investments Commission (ASIC) has provided a “regulatory sandbox” framework for Australian fintechs, which allows financial products and services to be tested in Australia without obtaining an Australian Financial Services Licence (AFSL) and/or an Australian Credit Licence (ACL).
According to the Treasury Laws Amendment (2018 Measures No. 2) Bill 2019, the new legislation intends to reform and enhance the regulatory sandbox to better support innovation in the financial and credit product and services sector, as well as minimise risks to consumers of said products and services.
Under the newly passed law, the regulatory sandbox period has been extended from 12 months to 24 months and empowers ASIC to make decisions over when the licensing exemption starts and ceases to apply, in order to protect the interests of customers.
The new law also expands the scope of the licensing exemptions to companies exploring a wider range of financial products and services, including financial advice, the issuing of consumer credit contracts and facilitating crowdsourced funding.
However, in an attempt to better protect consumers, ASIC’s regulatory powers will also allow it to limit the products and services that can be tested, as well as limit the financial exposures of retail clients.
According to Assistant Minister for Superannuation, Financial Services and Financial Technology Jane Hume, the legislative changes will ensure that Australian fintechs are internationally competitive, creating better outcomes for Australian consumers and the domestic economy.
“A strong fintech ecosystem means a more competitive financial market landscape – one that is consumer-driven, efficient and among the world’s leaders,” Assistant Minister Hume said.
“The Morrison government’s regulatory sandbox will encourage more Australian fintechs to test new products without the red tape that traditionally comes with entering the market.
“As a mature, diverse and internationally connected ecosystem, Australia is an attractive destination for fintech investment globally.
“The Morrison government is seizing this valuable opportunity to grow the sector even further,” she concluded.
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