On 24 December 2016 two legislative instruments prepared by ASIC came into force: ASIC Corporations (Concept Validation Licensing Exemption) Instrument 2016/1175; and ASIC Credit (Concept Validation Licensing Exemption) Instrument 2016/1176 (fintech licensing exemptions).
These instruments allow eligible financial technology businesses to test certain specified products and services for a period of up to 12 months without holding a relevant licence.
ASIC has also published Regulatory Guide 257: Testing fintech products and services without holding an AFS or credit licence, which contains information about:
• existing statutory exemptions or flexibility in the Corporations Act 2001 and National Consumer Protection Act 2009;
• the …show more content…
is not a reverse mortgage or a small amount credit contract);
• is not a consumer lease; and
• is not secured over residential property.
Significantly, the fintech licensing exemptions are not available for issuing financial products or providing credit. Furthermore, the exemptions do not apply to the following products and services which ASIC considers unsuitable for unlicensed testing without individual review of all circumstances:
(a) complex products (e.g. derivatives);
(b) illiquid products or arrangements that cannot be easily reversed;
(c) products with a long-term focus (e.g. superannuation and life insurance); and
(d) products that have previously been targeted at vulnerable consumers (e.g. consumer leases).
Conditions of relief
The fintech licensing exemptions are subject to a number of conditions of relief (many of which mirror the obligations that apply to AFS and credit licensees), which are designed to reduce the risk of poor consumer outcomes during unlicensed product and service testing, assist consumers to understand the products and services being tested, ensure that recourse is available in the event of a dispute, and to increase consumer confidence in using the testing