By Michelle Chasser and Daniel Knight
As part of the Federal Budget 2017-18 released on May 9 the Australian Government announced plans to enhance the regulatory sandbox established by the Australian Securities and Investment Commission (ASIC) last year.
The proposal includes expanding the types of products and services that will be eligible to be tested and extending the testing timeframe from 12 months to 24 months.
Currently sandbox participants can provide financial product advice about, and assist clients to trade in, lower risk financial products such as listed Australian securities, simple managed funds and deposit products. Accordingly, participation in the sandbox is typically limited to intermediary type businesses (eg robo-advisers). ASIC specifically excluded issuing financial products and lending from the sandbox to ensure that consumers received all the usual protections from the issuers. However, the Government proposes to expand the types of financial services and products that are allowed to be tested. Under the proposal, businesses will be able to:
- provide “holistic” financial product advice (presumably on a wider range of financial products);
- lend to consumers; and
- issue short term deposit or payments products (it is unclear what is meant by short term deposit products and how this will interact with the Australian Prudential Regulation Authority oversight usually required for some products of this kind).