FinTech: Australian Legislators Pass Law to Enhance ASIC’s Fintech Regulatory Sandbox
The amendments passed on Monday extend the scope and timeframe fintechs can spend on the existing ‘sandbox.’
Australia’s ‘Treasury Laws Amendment (2018 Measures No. 2) Bill 2019‘ allows more businesses such as fintechs to test a wider range of new financial and credit products and services without a license from ASIC for up to 24 months. (MONEY|MANAGEMENT)
The bill will substantially enhance the existing regulatory sandbox available to Aussie fintechs. Australia introduced that sandbox in 2016.
It was viewed as unduly restrictive because it was only available to startups working on specific products or services. It also allowed unregulated testing for only up to 12 months.
Just seven fintechs were said to have utilized it.
“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,” said Senator Jane Hume, the Assistant Minister for Superannuation, Financial Services, and Financial Technology. “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.”
Sandbox: Concept testing for fintechs
The explanatory memorandum for the Bill says that the amended and enhanced sandbox will allow businesses (such as fintechs) to market-test the concepts for their services or products prior to seeking to license from ASIC.
The sandbox will allow testing for consumer targeting, delivery channels, marketing, pricing and robustness of the technology.
Moreover, it will also allow businesses to more fully grasp the licensing implications. The enhanced sandbox will, therefore, reduce the effort required in the actual licensing procedure ultimately.
“It will provide a safe environment to help fintechs create a minimum viable product to take to market – to work out if their products and services are robust and have value for consumers,” said Senator Hume.
Checks and balances
“Have we learned nothing? A regulatory sandbox, providing a more flexible environment for entrepreneurs to develop sophisticated financial products. Do you know what that spells to me? One word: risk. These kinds of initiatives will be like burley to sharks,” said Senator Whish-Wilson.
The sandbox will, however, safeguard the risk to consumers from unlicensed testing.
“A range of strong consumer protections will be in place, including limits on the products and services that can be tested and limits on the financial exposures of retail clients,” added Hume.
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