New licensing exemption for fintech firms
The Australian Securities and Investments Commission (ASIC) has released a licensing exemption for fintech businesses which would allow them to test specified services, for up to 12 months and to 100 retail clients, without holding an Australian financial services or credit licence.
According to ASIC's commissioner, John Price, this was a unique move as no other major jurisdiction had implemented a class waiver that would allow businesses to notify the regulator and then commence testing without individual application process.
ASIC said its decision also represented a commitment to facilitating innovation in financial services.
"However, we are equally committed to ensuring that innovative products and services are regulated appropriately and promote good consumer outcomes," Price said.
"Fintech and start-up businesses now have more pathways than ever to begin testing the viability of innovative financial services and credit services consumers, before incurring many of the regulatory costs normally associated with running their business."
He added that the businesses that were not eligible for the fintech licensing exemption would have an option to seek an individual exemption.
"Individual applications are an important part of Australia's regulatory sandbox framework. For instance, this option is open to existing licensees who wish to test an innovative product or service and comply with a modified version of the law," he said.
Earlier this year ASIC released consultation paper ‘Further measures to facilitate innovation in financial services' which outlined ASIC's proposals:
- Provide examples on how ASIC exercises its discretion under existing policy to assess the organisational competence of a licensee applicant;
- Modify ASIC's policy on organisational competence of a licensee to allow some limited-in-scale, heavily automated businesses to rely, in part, on compliance sign-off from a professional third party to meet their organisational competence requirements; and
- Implement a limited industry-wide licensing exemption to allow start-ups to test certain financial services for six months.
The creation of the fintech licensing exemption was based on the paper.
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