The Australian Securities & Investments Commission (ASIC) released a consultation paper on 12 December 2017 seeking feedback on its fintech licensing exemption, also known as the regulatory sandbox. Following comment, ASIC will review whether the exemption is operating as intended, and consider whether it should be broadened or changed in any other way.
The licensing exemption allows eligible businesses to provide certain financial products and services for up to 12 months without a valid Australian Financial Services or credit licence. Contrary to the strategy of the UK Financial Conduct Authority, ASIC does not take an active approach in selecting applicants and negotiating individual terms for each entity using the exemption.
Although only 4 businesses have used the fintech licensing exemption since its inception 12 months ago, ASIC considers that the existence of the exemption has encouraged fintechs to approach ASIC for assistance where they might not have otherwise.
As mentioned in our previous blog, the Australian Government has committed to enhancing the regulatory sandbox to allow more businesses to test a wider range of financial products and services, with an extended 24 month testing timeframe. As such, ASIC considers that it would be inappropriate to amend the existing exemption until that legislation is passed.
The consultation period ends on 27 February 2018.