Australia has made history by becoming the first country in the world to offer a licensing exemption for financial technology (fintech) firms. The Australian Securities and Investments Commission (ASIC) declared that it will offer eligible fintech firms the opportunity to test out certain approved services without the need for an Australian Financial Services (AFS) or credit license. The move comes as other nations are attempting to encourage and entice fintechs with lighter regulations. The ASIC commissioner, John Price, asserted that “no other major jurisdiction has implemented a class waiver which allows eligible businesses to notify the regulator and then commence testing without an individual application process”.
What this means for interested parties is that they can test a product for a period of one year, with as many as 100 retailers, without the need for a license. These companies would have to meet consumer protection criteria as well as inform ASIC before they begin business. The commission has released its Regulatory Guide 257 (RG257) with the requirements for participation in the scheme.
The United Kingdom’s Financial Conduct Authority (FCA) has already released an open invitation to fintechs to be a part of their own sandbox, Project Innovate, that will allow them test out products with lighter regulatory requirements. Switzerland, India and Germany are also working on softer regulations for fintechs. With the growing importance of the young industry, it is expected that other countries will follow suit, quickly.