The corporate watchdog has its eye on new business models in financial services such as marketplace lending, crowd funding, robo-advice, payments and blockchain technology, and how they fit into ASIC’s guidelines.
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“By their nature, innovative business models often need to be analysed carefully to see where they fit in the regulatory framework,” said ASIC commissioner Greg Tanzer at the Future of Wealth Management Technology event held in Sydney earlier this month.
“These business models can test regulatory boundaries, creating uncertainty about how existing laws should be applied. Where we can, we work with the entity to help their business and cut red tape.”
ASIC established its Innovation Hub in April 2015 in order to proactively engage with the fintech sector and help start-ups navigate ASIC’s regulatory system.
“ASIC is committed to encouraging innovation, particularly where it can lead to better market and consumer outcomes. But it is important to note that the Innovation Hub will not compromise the fundamental principles of financial services regulation or the licensing process,” said Tanzer.
The AISC Innovation Hub engages with other fintech initiatives, including physical hubs and co-working spaces that have been established for startup businesses.
“We are making senior ASIC staff available at places like Stone and Chalk from time to time to answer questions,” said Tanzer.
Eligible start-ups are also able to request informal assistance from ASIC to make application processes run more smoothly.
In the first twelve months of operation, ASIC’s Innovation Hub worked with 93 entities, with 66 receiving informal assistance. As a result, 15 previously unlicensed innovative businesses have received a new financial services or credit licence since March 2015. The Innovation Hub has established relationships with international regulators in Europe, North America and Asia to discuss innovation developments and policy proposals.
An Innovation Hub Taskforce has also been formed, which includes senior executive leaders from many teams in ASIC and commissioner John Price. The taskforce will play an important coordination role in some of ASIC’s new policy work, including on marketplace lending, crowd-sourced equity funding, robo-advice, as well as any work that will follow from the Financial System Inquiry’s recommendations on innovation.
The regulator has also have established the Digital Finance Advisory Committee, or DFAC for short, which is made up of industry, consumer and academic representatives.