Fintech regulatory sandbox

The regulatory sandbox allows eligible fintech companies to test certain products or services for up to 12 months without an Australian financial services (AFS) licence or credit licence.

You can either:

  1. Rely on existing statutory exemptions or flexibility in the law – such as by acting on behalf of an existing licensee.
  2. Rely on ASIC’s ‘fintech licensing exemption’ for the testing of certain specified products and services.
  3. For other services, rely on individual relief from ASIC.

More information about each of these options is available in RG 257.

Other relief from regulatory licensing laws

ASIC also has other relief powers. Specifically, we have the power to:

  • provide exemptions from the licensing requirements for products or services (or classes of products or services); and,
  • modify some of the laws we administer.

Our policy on granting relief is set out in RG 51, with the general requirements for application under RG 51.25-51.26.

Areas of relief from licence-holding requirements

Examples of where ASIC has the power to relieve fintech companies from licensing requirements include:

  1. Services in relation to ‘low value’ non-cash payment products, where the maximum balance on any one product is $1,000 and the maximum aggregate balance on all facilities in the class is $10 million. See RG 185 and ASIC Corporations (Non-cash Payment Facilities) Instrument 2016/211
  2. Some services in relation to mortgage offset accounts. See Class Order [CO 03/1048] Mortgage offset accounts
  3. The provision of generic financial calculators. See Section D of Regulatory Guide 167 Licensing: Discretionary powers (RG 167) and ASIC Corporations (Generic Calculators) Instrument 2016/207
  4. The use of innovative forms of disclosure and, where providers are concerned that there are remaining regulatory barriers, we are open to granting individual relief to facilitate the use of these kinds of disclosure where they are consistent with ASIC’s Good Disclosure Principles. See Section B (RG 221.64-65) of Regulatory Guide 221: Facilitating digital financial services disclosures (RG 221)

In the case of most marketplace-lending business models (involving retail investors we have granted licenses to), ASIC provided relief from some requirements of the law. See our tailored guidance for marketplace lenders.

To help determine the most appropriate option for your business, please contact the Innovation Hub team.

Eligibility for fintech licensing exemption

The fintech licensing exemption applies to specified products or services. The eligibility criteria are explained in this infographic, along with some of the main conditions that apply.

More information on eligibility and the conditions that apply is available in Sections C and D of RG 257.

If your fintech business is eligible to rely on the exemption, you must notify ASIC before you begin to test. Once the notification process is complete, your business is legally entitled to rely on the relief for 12 months, so long as you follow the conditions that apply.

Download Licensing exemption for fintech testing infographic (PDF 51 KB)

Notify ASIC of your intent to use the regulatory sandbox

If you are eligible for the fintech licensing exemption, you must send ASIC written notice that you intend to test under the exemption to innovationhub@asic.gov.au. You must also provide ASIC with some information about your business.

Once the notification process is complete, the business is legally entitled to rely on the relief for 12 months, so long as it follows the conditions that apply.

Other laws relating to the regulatory sandbox

The regulatory sandbox framework deals with laws under ASIC’s administration. This means the 'fintech licensing exemption' does not provide exemptions from other laws. For example, depending on your business model you will need to check whether you need to comply with the anti-money laundering legislation administered by AUSTRAC or the tax agent services legislation administered by the Tax Practitioners Board.

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News

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Government's enhanced regulatory sandbox to commence 1 September 2020

1 July 20202

The Government’s Enhanced Regulatory Sandbox will be available from 1 September 2020. It will supersede the current ASIC Sandbox and offer eligible fintechs a wider suite of services and products for testing for a maximum duration of 24 months.

Find out more

Senate Select Committee on Financial Technology and Regulatory Technology

17 April 2020

The Senate Select Committee on Fintech and Regtech recently opened a second round of submissions requesting input on critical needs from industry in response to the COVID-19 pandemic. Follow the links below to read both of ASIC submissions to the Select Committee.

ASIC's first submission - 20 December 2019

ASIC's second submission - 17 April 2020

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Archive

Events

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Remote services and supervision webinar

14 July 2020

ASIC will host a webinar discussion forum between financial firms, professional service providers, regulators and guests highlighting regtech’s potential to support the provision and supervision of financial services whilst many staff work remotely.

Registrations to attend the webinar are now open.

Event details

Responsible lending demonstration webinar

20 August 2020

ASIC has released a synthetic dataset of consumer loan files for regtech providers to demonstrate how AI and machine learning could be used to support firms’ compliance with responsible lending obligations.

Registrations for the webinar, and to download the dataset, are now open.

Find out more


Archive

Last updated: 01/05/2019 05:27