Further enhancements to the Australian fintech industry to come into effect

Fintech innovation and competition in the financial sector is set to grow as a result of new laws passed by the Government. In recent years, the Government in cooperation with ASIC have been working to enhance the Australian fintech industry. The legislation passed in early 2020 will enable the creation of a fintech regulatory sandbox (“Sandbox”) building on the regulatory sandbox established by ASIC in 2016.

The Sandbox allows fintechs to test new financial products and services without first obtaining an Australian Financial Services or Australian Credit Licence. Testing in the Sandbox can take place for up to two (2) years. The Sandbox also allows pre-existing businesses to enable testing on improvements to current financial products and services as well as allowing testing for new businesses in relation to new financial product and service offerings. Examples of financial services that can be tested in the Sandbox include:

  • financial advice;
  • the issuance of consumer credit contracts; and
  • the facilitation of crowd-sourced funding.

The Australian Government is seeking to increase competition in the financial services industry by allowing businesses to test whether their intended product or service is viable. However, businesses will have to adhere to strict parameters to ensure testing does not pose any risk to consumers. Limits will be imposed on the products and services that can be tested, as well as limits on the financial exposures of retail clients.

Background Information

In February 2020, the Government passed the Treasury Laws Amendment (2018 Measures No. 2) Bill 2019 (the Bill) to create the Sandbox and allow for wider scope testing of businesses to operate without an Australian Financial Services or Australian Credit Licence than what is currently available under the regulatory sandbox established by ASIC. You can read more about why the Government introduced the Bill in our blog article.

Conclusion and Contact information

Ultimately, the introduction of the Sandbox is intended to encourage an efficient and consumer-driven market. These changes will help ensure Australia can effectively compete internationally in the fintech industry.

For further information in relation to the current Regulatory Sandbox refer to:

If you would like to speak to us about the licensing requirements applicable to your business or your eligibility to operate through the Sandbox, please contact us.

About The Author

Sarah Murray

Sarah works with the Compliance Team with a particular focus on compliance and legal services. Sarah works with the Legal Team providing ongoing assistance in drafting and reviewing documentation as well as legal research. Sarah assists clients with AFSL and ACL applications, variations and also assists in the implementation of compliance reviews. She provides ongoing compliance support in the form of compliance program implementation and reviews.