The Australian Securities and Investments Commission (ASIC) on Wednesday issued an update on its Innovation Hub, which has now been operating for just over a year and is continuing to assist financial technology (fintech) start-ups navigate the regulatory framework.
ASIC issue a public consultation paper on a proposed “regulatory sandbox licensing exemption”, among other measures, in June, the update says.
“This consultation paper will seek feedback on additional steps that ASIC may take to facilitate fintech innovation while maintaining protections to ensure investor and consumer trust and confidence,” said ASIC commissioner, John Price, in a statement.
In particular, the paper will propose a new exemption that will allow startups to run early-stage tests of new businesses without having to be licensed. The proposed exemption would: grant a six-month window for testing of certain financial services; impose restrictions on the types of products and services that can be provided in a testing phase; and allow sophisticated investors, and up to 100 retail clients, to participate in these experiments, along with setting monetary limits for those clients.
Fintechs taking advantage of the exemption would have to adhere to certain consumer protection requirements, such as membership in an external dispute resolution scheme, and to have adequate compensation arrangements in place. Firms would also have certain conduct and disclosure obligations.
“ASIC anticipates that the proposed regulatory sandbox exemption may bring better financial services to market quicker while being mindful of consumer protection concerns,” Price said; adding, “ASIC will continue to prioritize assistance to fintech start-ups to promote market efficiencies and benefits for consumers and investors. We will build on our first year’s Innovation Hub experience with a variety of initiatives.”