Eight days remain for submissions to the financial technology product (FinTech) consultation on the Exposure Draft Regulations (and accompanying Explanatory Statement) (the Draft Regulations) which is open until 1 December 2017. The Draft Regulations relate to the creation of a "legislative framework" (a sandbox) to encourage the development of FinTech product in Australia.
The consultation was announced in the last Budget (2017-18) by the Government who described the proposed regulations as:
A previous consultation on the Exposure Draft Legislation (and accompanying Explanatory Memorandum) has already concluded in November 2017 resulting in a Bill that extends regulation-making powers to enable an exemption from obtaining an Australian Financial Services Licence (AFSL) and/or an Australian Credit Licence (ACL) under certain conditions for the purposes of testing financial and credit services and products [that Exposure Draft is].
In broad terms the Draft Regulations contain the policy design details for the licensing exemptions, including the eligibility criteria, the eligible types of products and services, and the conditions which must be met by those using the exemption.
More specifically the Draft Regulations will relax the licensing requirements for innovative new FinTech startups, by excluding the mandatory requirements to meet all licensing requirements imposed by the Australian Securities and Trade Commission. Testing can be undertaken for up to 24 months with firms required to adhere to consumer protections and disclosure requirements. To rely on the exemption, a person must first notify ASIC that they intend to start relying on the exemption to provide an eligible financial service in relation to a particular kind of eligible financial product.
The new framework proposed by the Draft Regulations will allow FinTech firms to test and work on:
Reliance on the exemptions, will require an eligible person to satisfy a number of ongoing conditions. Breach of the conditions will cause the exemptions to "automatically cease". The conditions to be satisfied include:
Exemption can also cease to apply if:
Persons relying on the exemption must also comply with certain requirements:
Where an eligible person who relies on an exemption does not meet one or more of the requirements, ASIC may:
The consultation on the Draft Regulations and the accompanying explanatory statement remains open until 1 December 2017. Details on responding and how to respond are available.
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