Fintech (Week 5)

Question 1

What is Fintech?

Answer 1

The application of technology in the finance industry

Question 2

What are some considerations in the regulatory design post-GFC?

Answer 2

1. Do nothing and rely on the current framework
2. Case by case experimentation
3. Structured, transparent experimentation

Question 3

What are the 3 ways to run your Fintech company?

Answer 3

1. Existing flexibility in the law - Acting on behalf of an existing licensee or products that don’t require a license
2. Fintech licensing exemption - regulatory sandbox
3. Individual relief - ASIC can create an exemption from the corp and credit act

Question 4

What is the first step for a Fintech licensing exemption?

Answer 4

Must be an eligible person under section 5 (AFSL ER) who is not:

• Authorised by an AFSL to provide the financial product
• Authorised AFSL rep for that product
• An operator of a financial market
• A body corporate
• Used the exemption before for the same financial product

Question 5

What is the second step for a Fintech licensing exemption?

Answer 5

Must be an eligible financial service (AFSL ER s5)

• Financial product advice
• A particular financial product (AFSl ER s11)
• Issuing / varying or disposing of a non-cash payment facility

Question 6

What are some eligible products under the Fintech licensing exemption?

Answer 6

Under section 11 of AFSL ER:

• A deposit-taking facility regulated by APRA
• Insurance (Life / general), super)
• Securities (International and domestic)
• More: See slide 23 of week 5 lecture

Question 7

What are some conditions of the Fintech licensing exemption?

Answer 7

Exposure limits for each retail client (s12 AFSL ER) at $10,000 except for insurance and superannuation, but a 5 million aggregate (total) limit still applies (s13 AFSL ER).

Testing can be ceased earlier if ( AFSL ER s3): Conditions are breached in part 3, they can no longer rely on the exemption under section 14 or they cease it themselves.

Sections 17 to 24:

• S17: notifying clients
• S18: Notifying retail clients
• S20: Maintaining certain procedures
• S21 SOA’s
• S23 Financial product disclosure
• S24 Make good order

Question 8

What are the notification rules around the Fintech licensing exemption?

Answer 8

Section 6 and 16 of AFSL ER:

- Must notify ASIC and within 30 days approval is given. If no notifications are given then can operate after 30 days.

Question 9

What is the difference between AUS and UK Fintech licensing exemptions?

Answer 9

UK must apply for participation, more scrutiny for Scope, innovation, consumer benefit, need for sandbox and readiness for testing