Starting September 1st, 2020, natural persons and businesses can test certain innovative financial services or credit activities, without first obtaining an Australian financial services (AFS) licence or Australian credit licence (credit licence), through the enhanced regulatory sandbox (ERS) introduced by the Australian Securities and Investments Commission (ASIC).
The ERS supersedes the previous ASIC Fintech Sandbox, first established in December 2016. ASIC published a guidance for interested parties that explains the key changes some of which are listed hereunder:
The ERS allows for a longer testing period of up to 24 months (vs 12 months) for a broader range of financial services and credit activities.
Companies must meet 2 two new tests, namely – the net public benefit test and the innovation test, to be considered eligible.
The maximum number of retail clients that the financial services can be provided to increases from 100 clients to an unlimited number of clients.
A business can use the regulatory sandbox only once.
Disclosures to clients is required if tested financial service or product or credit activity changes significantly or is no longer offered, business ceases to operate, business ceases testing in ERS, or business obtains a licence for the service or product being tested.
ASIC also published an information sheet (INFO 248) that provides guidance to those who wish to rely on the ERS exemption
More information on the ERS can be found here: