FinTech Resources: ASIC Innovation Hub & Enhanced Regulatory Sandbox

The financial sector in Australia is subject to a robust regulatory regime, and Australian FinTechs usually have a lot more to consider than other types of startups. One of the more onerous tasks that many FinTechs will have to get past is securing necessary licensing from ASIC, such as AFS and credit licences. Luckily, ASIC provides a number of resources to assist FinTechs with navigating this process.

Innovation Hub

The Australia Securities & Investments Commission (ASIC) is Australia’s national corporate regulator. ASIC’s Innovation Hub initiative is designed to support fintech startup business with navigating (and complying with) the licensing process. The Innovation Hub:

• Facilitates and assists FinTech startups in securing Australian Financial Services (AFS) licensing and credit licencing.
• Consults with key players in the FinTech ecosystem to take on the community’s comments on regulatory matters.
• Provides informal guidance to eligible Australian FinTechs.

Only eligible startups can receive assistance from the Innovation Hub. The eligibility criteria is that your business must either:

• Require an AFS licence or credit licence;
• Be in the process of obtaining one of those licences; or
• Already have held one of those licences for less than 12 months.

As well as the minimum eligibility explained above, business will have a greater chance of securing support from the Innovation Hub if it can demonstrate that it is a new business that offers a beneficial or ground-breaking innovation. You can make your application through ASIC and, in doing so, you should provide as much information about your business as possible for ASIC’s consideration. We recommend consulting with a startup lawyer who can give you a deeper understanding of what ASIC is looking for. If your application is accepted, you can expect the following support:

• Being connected with an ASIC contact.
• Being guided and receiving assistance through the licensing application phase, including regular meetings with your ASIC contact to discuss the process or assist with any speedbumps that have been identified.
• Receiving guidance and support through your first 12 months of holding the licence (where necessary and appropriate).

You can read more about the Innovation Hub here.

Enhanced Regulatory Sandbox (ERS)

ASIC has also implemented the ERS to make it easier for FinTech startups to test or validate their offering. The ERS allows businesses to test innovative products prior to being licenced for up to 24 months. This is effectively an exemption to licencing requirements under certain conditions. The ERS isn’t an automatic right for startups though. To be able to leverage the benefits of the ERS, you must apply and be approved by ASIC. To be eligible (please note that the below list is not exhaustive, and the full list of criteria can be found in ASIC’s Information Sheet 248):

• You/your business must not currently be licenced for the same product that you would be seeking an exemption for.
• You must not be an authorised representative of an AFS or credit licencee.
• Only certain types of products can be tested under the ERS. A full list of these products can be found in Information Sheet 248.

As well as the above, the relevant product or service must also satisfy certain test including the net public benefit test and the innovation test. In preparing your application to ASIC, we recommend consulting with one of our commercial and startup lawyers to help you prepare an application with the highest changes of success.

Need Help? Contact Us

The startup ecosystem in Australia benefits largely from government initiatives such as the Innovation Hub and the ERS. If you think your FinTech is eligible or suitable for one of these initiatives, and you want to know more about how we can help, give us a call on 03 8691 3111 or send us an email at hello@alliedlegal.com.au.

You might also like National Startup Grant Opportunities Available Year Round.