Fintech enhanced regulatory sandbox application
The enhanced regulatory sandbox under the Corporations (FinTech Sandbox Australian Financial Services Licence Exemption) Regulations 2020 allows eligible fintech businesses to test certain financial services and credit activities for up to 24 months without an AFSL or Australian credit licence. This checklist guides legal advisers and fintech companies through the notification and testing framework.
This is a 12-step checklist for preparing an enhanced regulatory sandbox application in Australia. It covers eligibility criteria, ASIC notification requirements, consumer protection conditions, and testing period obligations.
The checklist
Confirm sandbox eligibility
Verify the proposed service falls within the classes of financial services or credit activities covered by the enhanced regulatory sandbox regulations.
Check exposure limits
Confirm the proposed testing will stay within the exposure limits: maximum $10,000 per retail client and $50 million total exposure across all clients.
Verify entity eligibility criteria
Confirm the entity is an Australian company or registered foreign company, has not previously used the sandbox for the same service, and is not disqualified.
Prepare the ASIC notification
Draft the written notification to ASIC containing all prescribed information about the proposed testing, including the service description and target market.
Design consumer protection measures
Establish consumer protection measures including clear disclosure that the service is being tested, internal dispute resolution, and AFCA membership.
Prepare disclosure documents for clients
Draft the required client disclosure document explaining the sandbox testing, the services being provided, client exposure limits, and compensation arrangements.
Obtain adequate compensation arrangements
Secure adequate compensation arrangements, which may include professional indemnity insurance or other arrangements approved by ASIC.
Submit notification to ASIC
Lodge the sandbox notification with ASIC and confirm receipt. The exemption commences on lodgement unless ASIC issues a stop order.
Implement ongoing reporting obligations
Establish systems for quarterly reporting to ASIC on client numbers, exposures, complaints, and any incidents during the testing period.
Monitor for ASIC stop orders
Monitor for any communication from ASIC regarding concerns or potential stop orders, and respond promptly to any requests for information.
Plan transition to full licensing
Prepare an AFSL or credit licence application during the testing period so the business can transition to full licensing before the sandbox period expires.
Manage sandbox expiry and client transition
Plan for orderly wind-down or transition of client relationships when the 24-month sandbox period ends, including client communication and data handling.
When this checklist applies
Use when a fintech company is considering the enhanced regulatory sandbox as a pathway to test financial services or credit activities before applying for a full licence.
Common pitfalls
- Testing a service class not covered by the sandbox regulations
- Exceeding per-client or total exposure limits during testing
- Not joining AFCA before commencing sandbox testing
- Insufficient planning for transition to full licensing before sandbox expiry
- Failing to maintain quarterly reporting obligations to ASIC
Run this checklist on a real matter
Quillio can assess sandbox eligibility, prepare notification documents, and track testing period obligations and exposure limits. See /practice-areas/financial-services-lawyers or start a free trial.
General guidance for the enhanced regulatory sandbox. Verify against current ASIC guidance and the FinTech Sandbox Regulations.
Use this checklist on your matter.
Quillio can run this checklist on a specific NSW conveyancing matter — confirm each item, calculate adjustments, and generate the supporting documents. The free trial requires no credit card.
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