Financial Technology, more commonly known by the buzzword ‘fintech’, is a broad description of a variety of new technologies and innovations that aim to compete with traditional financial methods in the delivery of financial services.

Although fintech is a relatively new approach, Sophie Grace has been assisting financial services and credit businesses to better understand the rules and regulations that may affect their businesses and the best way to manage them since 2006.

Sophie Grace is equipped to help businesses establish where they fit within the regulatory network and deal with the relevant regulators.

Avenues of Assistance for Fintech Startups

The Innovation Hub

ASIC’s Innovation Hub is an initiative for fintech business that are developing innovative financial products or services. Eligible businesses may receive informal guidance from ASIC through the Innovation Hub. The guidance provided is intended to help start-ups and scaleups navigate Australia’s regulatory system. For example, ASIC will assist businesses in understanding their obligations under the financial services and credit regulatory frameworks, how they administer this framework and ASIC’s thoughts on regulatory issues you should consider when establishing your business. Eligibility for the Innovation Hub will depend on whether your business meets certain criteria as set by ASIC.

The Regulatory Sandbox

The Australian Government’s Enhanced Regulatory Sandbox allows eligible fintech companies to test new products and financial services for up to 24 months without financial services or credit licensing requirements being imposed. The sandbox was created to encourage Australian innovation in the fintech sphere and minimise the regulatory barriers to entry in the fintech industry. There are three broad options for testing a new product or service without a licence. The options are:

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

Eligibility for the Regulatory Sandbox will depend on whether your business meets certain criteria as set by ASIC. You can learn about the Regulatory Sandbox here.

How Can Sophie Grace Help?

• Structure your fintech business;
• Determine if you require a licence;
• Explain the laws that apply to your business;
• Assist you in applying for an AFSL or ACL;
• Assist you to enrol with AUSTRAC; and
• Assist with the commercial needs of a start-up including drafting the relevant legal documentation.

Please contact us for more information on how we can assist you.