With all the talk in the budget about a proposed fintech sandbox to be established by ASIC, I thought someone should get their bucket and spade out and explain what's likely to be in the sandbox and how the current licensing regime will be relaxed:
- fintechs will be given a six-month window for testing of certain financial services conducted without the need for a licence;
- there will be restrictions on the types of services that can be provided in a testing capacity and the products those services can relate to (for example, advice and dealing in relation to liquid investments);
- there will be restrictions an ability for sophisticated investors to participate in the testing phase, along with a limited number of retail clients (e.g. up to 100 retail clients), as well as separate monetary exposure limits for those clients;
- there will be restrictions consumer protections, such as membership of an external dispute resolution scheme and adequate compensation arrangements that should apply; and
- there will be restrictions modified conduct and disclosure obligations that will apply to the testing business.