ASIC to play in ScoMo’s sandbox
Scott Morrison: The Treasurer want ASIC playing as hard as the FinTech entrepreneurs
The regulatory sandbox being proposed by ASIC is as much a plaything for the regulator as it is a place to nurture emerging FinTech companies, Treasurer Scott Morrison has promised.
ScoMo says a competitive regulatory environment is an important economic weapon in the global FinTech market, and he wants the regulators at the Australian Securities and Investment Commission to be at least as innovative as the companies they monitor.
Speaking at Australia’s premier financial technology co-working space and accelerator Tyro Fintech Hub, Mr Morrison said sharpening the government’s regulatory technology (‘RegTech’) prowess was a key to boosting success in the sector, and to retaining the nation’s status as a financial centre in this time zone.
The regulatory sandbox was heralded in the Treasurer’s first budget last month. ASIC has subsequently launched a draft consultation paper, proposing a sandbox that enables FinTech companies a mainstream regulatory holiday.
“My expectation of the regulators – who ultimately report to me – is that they will be as innovative as those [FinTech entrepreneurs] who are starting businesses,” Mr Morrison said, “and that the regulatory environment improves for everyone who works in this space.”
The ASIC sandbox proposal caps sandbox activity at 100 retail clients, each with a maximum exposure of $10,000 and a total exposure of less than $5 million. The sandbox includes consumer protection provisions around things like dispute resolutions and compensation arrangements where things go awry.
But the FinTech’s are able to eschew formal ASIC licences so they can get moving faster, as long as they have a registered sponsor for the service.
The ASIC proposals are currently subject to consultation process, but ScoMo has promised the sandbox will be a first order priority for the Coalition should it be returned to government.
“The sandbox provides a testing ground [for FinTech companies,] ScoMo said. “And frankly it is a testing ground for the regulator as well. This is not just a one-way street as a learning process.”
“The regulator also learns from the sandbox process, to understand the types of protections they need in place to deal with what are disruptive financial products,” he said.
“The whole point of FinTech is to disrupt. And the point of the sandbox is for the regulator to be innovative as well and to ensure that we have the proper regulatory environment in place.”
Mr Morrison said he had been impressed with the level of FinTech innovation coming out of Australia after visiting the giant Asian FinTech hubs of Shanghai and Hong Kong earlier this year.
He said he came away from those trips convinced that a more competitive regulatory environment would be a critical component of any on-going success Australia was to enjoy in the burgeoning global FinTech sector.
Tyro CEO Jost Stollmann said the regulatory changes would help encourage some of Australia’s best and brightest bankers to leave the comfort of Big Four banks and venture out on their own with disruptive new ideas.
“Australia’s financial services sector is the largest contributor to the national economy, providing about $140 billion to GDP last year, and employing about 450,000 people,” Mr Stollmann said.
“The Australian Government’s package of measures will help unleash a new generation of entrepreneurs and investors who want to make everything we do quicker, easier and more productive,” he said.
“Australia needs to set itself up as FinTech friendly if it wants to set itself up for the next generation of economic growth.”