Fintechs welcome regulatory sandbox proposal

09-Jun-2016

By Jerome Doraisamy

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Leaders in Australia’s fintech community have welcomed a proposal by ASIC to implement a limited licensing exemption so that start-ups can test certain financial services for six months.

Known as the ‘regulatory sandbox’ exemption, the proposal will seek to address hurdles facing new fintech businesses looking to enter the financial services market, such as needing to meet the organisational competence requirements of an Australian financial services licence.

Patrick Garrett, chief executive of newly established robo-adviser Six Park, said the group had come up against similar hurdles in its attempts to bring products to market.

“It was a huge challenge for us to build and test our end-to-end offering and secure the appropriate authorisations at the same time,” Garrett said.

“As long as the testing environment is managed well, this initiative should be terrific for the start-up community.”

Garrett’s sentiments were mirrored by MoneyPlace chief executive Stuart Stoyan, who said: “It took MoneyPlace around 18 months to get regulatory approval. We were fortunate enough to have patient investors, but this sandbox would have enabled us to test and prove our business model more quickly.

“The proposal is promising and reasonable in terms of limiting customer numbers and dollars at risk as the sandbox should be used to test and prove business models.”

ASIC commissioner John Price spoke of the need to address hurdles faced by start-ups.

“We believe the measures proposed in this consultation paper will help to lower barriers to entry faced by fintech start-ups by providing cost reductions and promoting efficiency in the provision of financial services, whilst maintaining the fundamental principles of the regulatory and licensing framework,” Price said.

In comments approving the proposed changes, Stone & Chalk chief executive Alex Scandurra said: “ASIC’s proposal to provide conditional industry-wide relief to allow Australian fintech start-ups to access this sandbox approach is a potential game changer.

“If implemented not only would Australia's sandbox lead the world and leapfrog what the UK is contemplating, it would provide a strong proof point towards the successful collaboration between leaders in the fintech community, ASIC and Treasury that started late last year.”

KPMG Innovate Australia head James Mabbott echoed that, highlighting the proposal’s alignment with the firm’s advocacy in recent years for regulatory frameworks that supported innovation.

“We welcome ASIC’s recommendation for a regulatory sandbox for fintech companies. [It] will further underline Australia's commitment to being a regional fintech centre,” Mabbott said.

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