Jane Hume (Victoria, Liberal Party, Assistant Minister for Superannuation, Financial Services and Financial Technology) Share this | Hansard source

You're right, Senator McAllister, it is about finding the right balance between allowing innovation to flourish and at the same time putting in the appropriate consumer protections. To reduce the risk of consumer harm during unlicensed testing, businesses will need to comply with certain disclosure and consumer protection requirements. As I mentioned earlier, before providing the services, businesses will need to notify clients that they're operating without a licence or authorisation from ASIC. Of course the normal protections will apply that I mentioned before—disclosure requirements, best interests duties for advisers, responsible lending, internal and external dispute resolutions, and adequate compensation.

In addition, many of the underlying products that are offered through the regulatory sandbox will still be backed by a licensed business. For example, businesses can only provide financial advice to retail clients in relation to superannuation products in a regulated superannuation fund. In addition to that, there will be further safeguards that will be in place to limit the financial exposure for retail clients. Businesses will only be able to offer specified products and services to retail clients, and will generally only be able to invest up to specified exposure limits. This recognises that retail clients are less able to withstand financial setbacks. ASIC, of course, can take action if businesses aren't meeting those requirements, and the regulations are, of course, still disallowable.