Australia’s Regulatory Sandbox Regime for FinTech Start-Ups Expanded

In July last year, we discussed a proposed expansion of ASIC’s regulatory sandbox regime for FinTechs.1 The proposal – set out in the Treasury Laws Amendment (2018 Measures No. 2) Bill 2019 (Bill) – was at that time before the House of Representatives. On 10 February 2020, the Bill passed the Senate and is expected to come into effect shortly. Given these developments, we have written a brief recap of the sandbox regime and what its expansion will mean for FinTech businesses.

A brief history

In 2016, ASIC introduced a regulatory sandbox regime for FinTechs, allowing eligible businesses to test particular financial services or credit activities in a less onerous regulatory environment.

Despite the promise held out by the regime, the sandbox remained under-utilised by FinTech businesses. The recently-passed Bill provides more flexibility, seeking to enable more FinTech businesses to test a wider range of financial products and services using the sandbox regime.

Nature of Exemption – Conditional vs. Unconditional

Previously, the sandbox regime only allowed for unconditional exemptions from Australian Financial Services Licence (AFSL) and Australian Credit Licence (ACL) requirements. The new regime provides an additional regulatory option for conditional exemptions from AFSL and ACL requirements for the purpose of testing financial and credit products and services. If a business fails to meet any of the prescribed conditions, ASIC may cancel the business’s exemption or apply to a court for an order requiring the business to comply in a particular way. The Bill also empowers ASIC to make decisions regarding how the exemption starts and ceases to apply to a business.

Further Changes under the Regulations

A number of other changes to the regime are contained in the Corporations (FinTech Sandbox Australian Financial Services Licence Exemption) Regulations 2017 and the National Consumer Credit Protection (FinTech Sandbox Australian Credit Licence Exemption) Regulations 2017 (Regulations).2 Currently, these Regulations remain in draft form.

The key changes include:

  • allowing businesses to use the sandbox for up to 24 months (rather than the current maximum of 12 months);
  • imposing additional consumer-protection conditions on businesses operating under the regime;
  • expanding the products included in the sandbox to include life and general insurance, superannuation, listed international securities, non-cash payment facilities, crowd-funding, consumer credit contracts and most wholesale financial products; and
  • imposing additional requirements for credit contracts covered by the regime (such contracts can not exceed 4 years and must provide for a minimum of $2,000 in credit and up to the maximum of $25,000 already in place).

The inclusion of these changes in the Regulations (rather than the Bill) is designed to give the Government and ASIC the flexibility to make timely changes in response to changes in the market.

Where to from here?

An independent review will take place 12 months after the Regulations commence, to ensure that the regime is operating effectively and is fit for purpose.

If you would like to take advantage of these developments in Australia’s FinTech landscape or need advice about the regulatory environment that applies to your business, we’re here to help.


1.For further information, please see our previous focus papers ‘It’s Time to Play: Australia’s World-First Regulatory Sandbox for FinTech Start-Ups’ and ‘More room to play: ASIC Expands Australia’s Regulatory Sandbox Regime for FinTech Start-Ups’
2. Corporations (FinTech Sandbox Australian Financial Services Licence Exemption) Regulations 2017 and National Consumer Credit Protection (FinTech Sandbox Australian Credit Licence Exemption) Regulations 2017


Liability limited by a scheme approved under Professional Standards Legislation.
© ADDISONS. No part of this document may in any form or by any means be reproduced, stored in a retrieval system or transmitted without prior written consent. This document is for general information only and cannot be relied upon as legal advice.

Liability limited by a scheme approved under Professional Standards Legislation.
© ADDISONS. No part of this document may in any form or by any means be reproduced, stored in a retrieval system or transmitted without prior written consent. This document is for general information only and cannot be relied upon as legal advice.