The Australian Securities and Investments Commission (ASIC) has delivered on its promise of a "regulatory sandbox" for new FinTech companies with the release of world-first licensing exemptions. The regulatory instruments ASIC Credit (Concept Validation Licensing Exemption) Instrument 2016/1176 and ASIC Corporations (Concept Validation Licensing Exemption) Instrument 2016/1175 will allow eligible businesses to test certain products and services for a period of 12 months without an Australian financial services (AFS) licence or Australian credit licence. The purpose of these legislative instruments is to reduce the regulatory burden and remove barriers to innovation, which ASIC Commissioner John Price describes as an "important update to our licensing regime which take[s] into account the circumstances of new innovative businesses and facilitate[s] these businesses to meet the organisational competence requirements in alternative ways". To assist companies in determining eligibility, ASIC has also published Regulatory Guide 257 Testing FinTech products and services without holding an AFS or credit licence (RG 257), which details the exemptions and eligibility requirements. To rely on the exemption, businesses must provide ASIC with written notice of their intention to do so, along with specified information relating to their business. The testing period will commence 14 days after ASIC is notified. Eligible financial products and services include the giving of financial product advice and dealing in financial products in relation to: • listed or quoted Australian securities; • simple managed investments schemes (being certain types of registered schemes); • deposit products; • certain types of general insurance products; and • payment products issued by authorised deposit-taking institutions. Eligible credit services include those in relation to credit contracts to which each of the following applies: • the credit contract is not a reverse mortgage, a small amount credit contract or a short-term credit contract; • none of the credit provided under the credit contract is secured by a mortgage over residential property; • the credit limit of the contract does not exceed $25,000; and • the annual cost rate of the contract does not exceed 24%. While the stated purpose of the exemptions is to address issues faced by start-ups and other innovative businesses, ASIC reserves its right to exclude businesses from exemptions where it considers they are not innovative or do not use technology when providing financial services or credit. RG 257 is available here.