The Turnbull Government has today released exposure draft legislation and regulations to create an enhanced regulatory sandbox to support innovation in financial services.
This proposed legislative package will be a game changer for competition in the financial services sector and continues the Turnbull Government's strong support of Australian FinTech which has helped Australia become the second largest alternative finance market in the Asia-Pacific.
As announced in the 2017-18 Budget, the FinTech regulatory sandbox will allow a broad scope of activities to be tested without the need to meet all the existing licensing requirements of the Australian Securities and Investments Commission. The enhanced regulatory sandbox will help firms overcome the initial regulatory burden and costs of licensing that may otherwise hinder innovative offerings.
This is an exciting opportunity that will further cement Australia's position as a leading FinTech hub in the Asia‑Pacific.
Under the Government's legislative framework, firms can test a wider range of new and innovative FinTech products and services, including:
- providing holistic financial advice in relation to superannuation, life insurance and domestic and international securities;
- issuing and facilitating consumer credit;
- issuing non-cash payment products; and
- providing a crowd-funding service.
The 24‑month testing timeframe will improve firms' ability to evaluate the commercial viability of new concepts, promoting greater competition and delivering more choice for Australian consumers.
Firms will need to adhere to robust consumer protections and disclosure requirements including responsible lending obligations, best interests duty, and the need for adequate compensation and dispute resolution arrangements.
The exposure drafts and explanatory material are available on the Treasury website.
Consultation on the draft legislation (and explanatory memorandum) is open until 3 November 2017, and on the draft regulations (and explanatory statement) until 1 December 2017.