Draft legislation and regulations, foreshadowed in the May federal budget, to support innovation in financial services and fintech startups have been released.
The fintech regulatory sandbox will allow a broader scope of activities to be tested without the need to meet all existing licensing requirements of ASIC (Australian Securities and Investments Commission).
The new rules are designed to strike a better balance between encouraging competition and innovation that delivers choice for consumers, while minimising risks to them as well as the integrity of the financial system.
Startups can get exemptions from financial services licence requirements for up to 24 months.
“The enhanced regulatory sandbox will help firms overcome the initial regulatory burden and costs of licensing that may otherwise hinder innovative offerings,” says treasurer Scott Morrison.
Under the new rules, startups can test a wider range of fintech products and services including superannuation, life insurance and domestic and international securities, non-cash payment products and crowd-funding.
Consultation on the draft legislation is open until November 3.