Accordance with the Turnbull Government's call for an "innovation nation," the Australian Securities and Investments Commission (ASIC) has issued Consultation Paper 260: Further measures to facilitate innovation in financial services (CP 260) which examined various options to encourage and assist start-up financial technology (FinTech) businesses to test and navigate through Australia's financial services regulatory framework. One of the options presented by ASIC for public feedback includes a so-called "regulatory sandbox."

According to CP 260, ASIC seeks to address the barriers to innovation for FinTech start-up. The main focuses that ASIC has identified are speed to market, organizational competence and access to capital.

ASIC has presented the following five options for public consultation and feedback. Option One is provision of guidance on the suitability of a responsible manager who has appropriate knowledge and skills. Option Two is reliance of experienced third parties to meet organizations organizational competence. Option Three is provision of conditional industry-wide exemptions permitting new Australian business. Option Four is a combination of Option 1-3  and Option Five is maintaining the existing financial  services regulatory framework without change.

Also, as per CP 260, there are some following features to be followed. Some of the features that will be adopted by ASIC are:

Six months of unlicensed testing of financial service to retail clients-ASIC may excuse Australian FinTech start-up entities from holding an AFSL during a 6-month testing stage of their product services. In addition to this exemption from having to obtain AFSL, they may also grant relief from some of the time consuming and expensive regulatory demands.

Existing Licensed-existing  AFSL holders may be able to apply for certain Regulatory Sandbox Exemptions. ASIC has indicted that it does not intent to grant industry-wide relief to existing AFSL holders; however, it is likely that ASIC will consider requests on a case-by-case basis.

Conditions of the Regulatory Sandbox Exemption-these conditions are: the service or product should be provided to a maximum of 100 retail clients, each with a maximum exposure limit of  A$10,000 and the total exposure of the product service to all clients must be less than A$5 million.