Regulatory sandbox to boost fintech innovation
The Morrison government is finalising regulations that will establish an enhanced regulatory sandbox to ease the process for fintech businesses trialling new products.
The enhanced sandbox, available from 1 September, is expected to provide a further boost to Australia’s rapidly maturing fintech ecosystem, reducing barriers to entry and promoting competition.
The sandbox will function by creating a safe environment for fintech firms to test the viability of new products and services without first holding licences that can be costly and time-consuming to obtain.
Innovative firms now have 24 months to test their products with customers in the sandbox before obtaining a financial services licence or a credit licence from the Australian Securities and Investments Commission (ASIC)
"Australian consumers will benefit from greater choice in financial services, with technology-driven offerings that are convenient, tailored and cost effective," said Assistant Minister for Superannuation, Financial Services and Financial Technology, Jane Hume.
The enhanced sandbox broadens the range of financial services available for market testing, including services which advise on or distribute non-cash payment products, insurance, superannuation, simple managed investment schemes, listed securities and consumer credit contracts between $2,000 and $25,000.
Ms Hume stressed that robust consumer protections remain in place.
"Firms will be required to demonstrate that their proposed service is genuinely innovative and is likely to result in net consumer benefit. Product limits and caps on aggregate and individual exposures also apply," she said.
Firms will also be required to have adequate professional indemnity insurance and be a member of the Australian Financial Complaints Authority (AFCA).
Full details are contained in the Corporations (FinTech Sandbox Australian Financial Services Licence Exemption) Regulations 2020 and the National Consumer Credit Protection (FinTech Sandbox Australian Financial Services Licence Exemption) Regulations 2020, which received royal assent late last week.