On 19 October, the Australian Securities & Investments Commission (ASIC) and New Zealand’s Financial Markets Authority (FMA) “re-affirmed” a commitment to collaboration and cooperation on the expanding opportunities in FinTech collaboration and innovation.

fintech-collaboration
fintech-collaboration

However, in that media release, there is little detail on what practical opportunities this may provide for Australian business. In today’s article, we describe how this announcement might present a change for Australian businesses and point out three things that an Australian business needs to take into account when considering whether to offer a FinTech service in New Zealand.

Fintech collaboration – What’s changed?

The ASIC/FMA announcement is more than just a “re-affirmation” of the existing relationship between the two regulators. The existing Memorandum of Understanding between the regulators in both countries is general in nature (rather than fintech-specific) signals an intent to “consult, co-operate and exchange information in relation to the laws and regulations of each authority”.

With their latest announcement, the two regulators suggest a move towards the active assistance of FinTech businesses in each respective jurisdiction:

“Regulators will assist innovative businesses hoping to make ventures into each other’s markets by providing referrals for advice and support.”

The relationship between the two regulators will now be equivalent to the relationships that exist between ASIC in Australia and regulators in, Hong Kong, the United Kingdom, Ontario and Singapore (see our previous post on this topic here).

Given that there will now be this assistance for Australian FinTech businesses that seek to operate in New Zealand, what matters do they need to consider before expanding into this market? Below we list three considerations for fintech collaboration.

The trans-Tasman mutual recognition Scheme

The trans-Tasman mutual recognition scheme is a framework involving ASIC, FMA and the New Zealand Companies Office that allows an issuer to offer specified financial products in both countries, while being exempt from many of the requirements that they would otherwise need to meet.

For example, an Australian issuer in the New Zealand market is still subject to all the relevant Australian regulatory requirements, but is not subject to the disclosure and financial product governance requirements under New Zealand’s Financial Markets Conduct Act 2013 (the FMCA). Those eligible financial products include equity or debt securities, interests in an Australian registered scheme, and any interest in, or option to acquire, these financial products.

New Zealand does not have a FinTech regulatory sandbox

We recently discussed the expansion of the Australian regulatory sandbox which allows a range of fintech and credit technology services to be trialled without meeting the need for an Australian Financial Services Licence or an Australian Credit Licence (see our previous post on the subject).

There is no regulatory sandbox in New Zealand which means that there is no general exemption to licensing and compliance requirements for businesses trialling FinTech products.

There are, however, tailored exemptions depending on the type of service and product you wish to provide. For example, the FMCA introduced a bespoke regulatory regime for equity-based crowd-funding. By obtaining a crowdfunding licence, a provider is exempted from some of the regulatory requirements that would otherwise apply, such as the requirement to provide a product disclosure statement (see FMCA, s6 of schedule 1).

Upcoming robo-advice exemption

On 18 October 2017, the FMA announced that it has decided to grant an exemption from the Financial Advisors Act 2008 to enable the provision of personalised robo-advice services in New Zealand. This is necessary as that Act requires that advice be provided by a “natural person” (see s5).

Under this new policy, prospective providers will need to apply to the FMA to rely on this exemption and meet a range of conditions, including consumer protections.

This is intended as a temporary solution until the Financial Services Legislation Bill is passed by the New Zealand Parliament. That Bill would remove from legislation the requirement that such advice be provided by a natural person. Note, however, that with a new Government just appointed in New Zealand, the passage of that bill is now uncertain.

If you think that we could be of any assistance in complying with FinTech collaboration or regulation in other jurisdictions, please get in contact with us and we will either be able to advise you or refer you to the appropriate expertise.

 

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