The Chairman's Red Blog – November 2019
In promising signs for providers of fintech products and services, the Treasury Laws Amendment (2018 Measures No. 2) Bill 2019 (Bill) is one step closer to implementation as Australian law, having recently passed the House of Representatives on 15 October 2019.
The Bill amends existing legislation, including the Corporations Act 2001 (Cth) and the National Consumer Credit Protection Act 2009 (Cth) to extend regulation-making powers to enable exemptions from obtaining an Australian Financial Services Licence and/or an Australian Credit Licence for the purpose of testing fintech products or services. The Bill also makes minor amendments to the Income Tax Assessment Act 1997 (Cth) to ensure the venture capital and early stage investor tax concession provisions operate as intended.
The purpose of the Bill is to encourage and support fintech innovation by reducing the hurdles to early stage fintech companies bringing their products to market, which they often face as a result of the substantial laws and regulations currently in place.
ASIC has provided a 'regulatory sandbox' framework since December 2016, joining several jurisdictions around the world (including the UK, Singapore and Hong Kong). ASIC's regulatory sandbox is currently effected through the issue of various ASIC instruments, which alleviate eligible companies from the full application of current legislation (provided that certain conditions are complied with).
The Bill is intended to implement the Government's reform to enhance the regulatory sandbox, allowing more businesses to test a wider range of new financial and credit products and services without a licence from ASIC, for a longer time.
The Bill was introduced to the Senate on 17 October 2019 and now awaits a second and third hearing before it is passed by the Senate.
If implemented, the Bill also provides for an independent review of the changes made by the Bill, 12 months after its commencement. It will be interesting to see the results of this review, and the effectiveness of the regulatory sandbox in encouraging investment and innovation in the fintech space.
This will certainly be an area that we will watch closely for ongoing developments.
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