About ERS
The ERS allows certain eligible businesses to test particular services or credit activities without having to first obtain an AFSL. It comes after a disappointing uptake of the previous iteration, which recorded only seven applications for the licensing exemption.
The broadened exemption hopes to reduce barriers restricting financial innovation in Australia by allowing a greater range of financial services, products and credit activities to be tested. It applies to new businesses and has been extended to include existing businesses who propose to test services and products for which they are not already authorised.
Key features of the ERS (and where it differs to the original offering) include:
An extension of the timeframe for testing from 12 to 24 months;
A removal of the 100 retail client cap; and
A removal of client exposure limits for certain products issued by an ADI.
Eligibility
In addition to lodging a notification with ASIC meeting eligibility criteria, ASIC have introduced two new tests that must also be satisfied. The tests – a net public benefit test and an innovation test – require ASIC to be satisfied that the eligible service, product or credit activity will result (or likely result) in a benefit to the public and be considered either an entirely new service or an adaptation/improvement of an existing service.
In a recent webinar providing an overview of the ERS, ASIC indicated that once a notification had been submitted it would not liaise with businesses on the application’s suitability or progress, inferring the importance of submitting a complete, accurate and appropriate notification in the first instance.
Further information on the ERS can be accessed via ASIC’s INFO 248: Enhanced Regulatory Sandbox.
If you are concerned by whether the financial service, product or credit activity you have in development will meet the eligibility criteria of the ERS, please contact us and a member of our financial services team will be in touch to discuss your business and potential application.
This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.