By passing the Treasury Laws Amendment (2018 Measures No. 2) Bill 2019 on Monday, the government has extended the scope and timeframe fintechs can spend on the existing framework.
The enhancement of this regulatory scaffolding allows fintechs to test their products over a period of 24 months without a financial services or credit licence. To protect consumers from the risk of unlicensed testing, a number of strong consumer protections will be put in place such as limiting certain products and services and the financial exposures of retail clients.
The new rules will welcome businesses previously unable to access the sandbox including those issuing consumer credit contracts, facilitating crowdsourced funding and those working on financial advice.
When it was originally announced in 2016, the Australian Securities and Investment Commission’s (ASIC) sandbox was praised for leading the way for innovation in the space. However, this adulation turned to scrutiny as strict regulatory oversight resulted in very few (as few as seven) fintechs being able to leverage the sandbox’ offering.
In a statement released by the Treasury, Assistant Minister Jane Hume said “a strong fintech ecosystem means a more competitive financial market landscape - one that is consumer-driven, efficient and among the world’s leaders.
The government’s sandbox “will encourage more Australian fintechs to test new products without the red tape that traditionally comes with entering the market. As a mature, diverse and internationally connected ecosystem, Australia is an attractive destination for fintech investment globally.”
In another boost for the country’s finance landscape, this week Australia’s competition watchdog finalised the rules which govern Consumer Data Right regulations, preparing the scene for Open Banking in Australia. The update will not only mandate the country’s ‘big four’ banks to share product reference data, but bring legislative force to the consumer data sharing requirements coming into effect from July 2020.