The Australian Securities and Investments Commission (ASIC) Innovation Hub has now been operating for just over a year; its remit is to assist financial technology (FinTech) start-ups navigate the regulatory framework.
Commissioner John Price has announced that, ‘ASIC will continue to prioritise assistance to FinTech start-ups to promote market efficiencies and benefits for consumers and investors.’
In June, ASIC will issue a public consultation paper on a proposed regulatory sandbox licensing exemption and other measures.
Price indicated that ASIC will seek feedback on proposals to provide:
- greater clarity and guidance on how it assesses whether new businesses have the skills and experience required to be granted a licence;
- whether some licensees with restricted authorisations should be able to rely more on appropriate third parties to show they have the ‘organisational competence’ required to be granted a licence; and
- a class-wide licensing waiver for new businesses to run early-stage tests and trials (the ‘regulatory sandbox exemption’)
Important features of the regulatory sandbox exemption to be consulted on will include:
- a six-month window for testing of certain financial services conducted without the need for a licence;
- restrictions on the types of services that can be provided in a testing capacity and the products those services can relate to (for example, advice and dealing in relation to liquid investments);
- an ability for sophisticated investors to participate, along with a limited number of retail clients (e.g. up to 100 retail clients), as well as separate monetary exposure limits for those clients;
- consumer protections, such as membership of an external dispute resolution scheme and adequate compensation arrangements that should apply; and
- modified conduct and disclosure obligations that will apply to the testing business
“ASIC anticipates that the proposed regulatory sandbox exemption may bring better financial services to market quicker while being mindful of consumer protection concerns,” Mr Price said.
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