ASIC has released its recent review of its regulatory sandbox. The sandbox was established in December 2016 to encourage investment in the fintech sector by providing flexibility in the regulatory framework through a number of licensing exemptions. The consultation paper proposes to retain the fintech licensing exemption, with no changes to the sandbox’s current structure.
ASIC’s fintech licensing exemption allows eligible fintech businesses to test certain specified services without needing to hold an Australian financial services licence or credit licence. Eligible businesses may take advantage of the exemption for up to twelve months with up to one hundred retail clients, as long as certain consumer protection conditions are met and a notification is made to ASIC of the intention to conduct business. The regulator stated that the rationale for making no changes to the exemption is to maintain a consistent framework until such time as Parliament implements its proposed legislation for an enhanced regulatory sandbox exemption. This new exemption would likely supersede the fintech licensing exemption.
Although various members of the fintech sector have criticised the sandbox for a lack of uptake, ASIC said that four fintech businesses have accessed the licensing exemption. One business is testing its financial services in providing advice and dealing in listed securities, two businesses are testing advisory and dealing services in deposit products, and one business is acting as an intermediary and providing credit assistance. Over a dozen fintech businesses have contacted ASIC in relation to using the fintech licensing exemption.
Consultation on ASIC's proposal to leave the regulatory sandbox unchanged closes 27 February 2018.