Jenny McAllister (NSW, Australian Labor Party, Shadow Cabinet Secretary) Share this | Hansard source

Other senators seem to have exhausted their questions for the minister. I'd like to move now to the amendment that's been circulated in my name. I seek leave to move amendments (1) to (8) together.

Leave granted.

I move:

(1) Schedule 1, item 2, page 4 (lines 16 to 21), omit subsection 926B(3), substitute:

FinTech sandbox exemption

   (3) A FinTech sandbox exemption may apply unconditionally or subject to specified conditions.

   (3A) A FinTech sandbox exemption does not apply in relation to a person and a financial service unless:

     (a) the person has lodged a notification in relation to the service with ASIC that complies with subsection (3B); and

     (b) the 30-day period starting on the day the notification was so lodged has ended without ASIC giving the provider written notice of a decision under subsection (3C) relating to the notification.

  (3B) For the purposes of paragraph (3A) (a), the person must lodge a notification with ASIC that includes the following:

     (a) a description of each financial service (including of any related kind of financial product) for which the person is proposing to use the exemption;

     (b) a justification of why exempting each of those financial services will result, or be likely to result, in a benefit to the public that will outweigh the detriment to the public that will result, or be likely to result, from exempting that service;

     (c) any other information required by regulations made for the purposes of this paragraph.

  (3C) ASIC may, after considering the notification referred to in paragraph (3A) (a), decide it is not satisfied of one or more of the following:

     (a) that the financial service:

        (i) is new; or

        (ii) is a new adaptation, or new improvement, of another financial service;

     (b) that exempting the financial service will result, or be likely to result, in a benefit to the public that will outweigh the detriment to the public that will result, or be likely to result, from exempting that service;

     (c) that any other condition prescribed by regulation s made for the purposes of this paragraph is met.

(2) Schedule 1, item 2, page 4 (line 22), omit "an exemption", substitute "a FinTech sandbox exemption".

(3) Schedule 1, item 2, page 4 (line 26), omit "An exemption described in subsection (3)", substitute "A FinTech sandbox exemption".

(4) Schedule 1, item 2, page 4 (after line 28), at the end of section 926B, add:

  (6) In this section:

FinTech sandbox exemption means an exemption that:

     (a) is made for the for purposes of paragraph (1) (a); and

     (b) exempts a person or class of persons from subsection 911A(1) to enable testing of particular financial services.

(5) Schedule 1, item 5, page 5 (lines 10 to 14), omit subsection 110(2), substitute:

FinTech sandbox exemption

  (2) A FinTech sandbox exemption may apply unconditionally or subject to specified conditions.

  (2A) A FinTech sandbox exemption does not apply in relation to a person and a credit activity unless:

     (a) the person has lodged a notification in relation to the activity with ASIC that complies with subsection (2B); and

     (b) the 30-day period starting on the day the notification was so lodged has ended without ASIC giving the provider written notice of a decision under subsection (2C) relating to the notification.

  (2B) For the purposes of paragraph (2A) (a), the person must lodge a notification with ASIC that includes the following:

     (a) a description of each credit activity (including of any related kind of credit activity) for which the person is proposing to use the exemption;

     (b) a justification of why exempting each of those credit activities will result, or be likely to result, in a benefit to the public that will outweigh the detriment to the public that will result, or be likely to result, from exempting that activity;

     (c) any other information required by regulations made for the purposes of this paragraph.

  (2C) ASIC may, after considering the notification referred to in paragraph (2A) (a), decide it is not satisfied of one or more of the following:

     (a) that the credit activity:

        (i) is new; or

        (ii) is a new adaptation, or new improvement, of another credit activity;

     (b) that exempting the credit activity will result, or be likely to result, in a benefit to the public that will outweigh the detriment to the public that will result, or be likely to result, from exempting that activity;

     (c) that any other condition prescribed by regulations made for the purposes of this paragraph is met.

(6) Schedule 1, item 5, page 5 (line 15), omit "an exemption", substitute "a FinTech sandbox exemption".

(7) Schedule 1, item 5, page 5 (line 19), omit "An exemption described in subsection (2)", substitute "A FinTech sandbox exemption".

(8) Schedule 1, item 5, page 5 (after line 21), at the end of section 110, add:

  (5) In this section:

FinTech sandbox exemption means an exemption that:

     (a) is made for the for purposes of paragraph (1) (a); and

     (b) exempts a person or class of persons from subsection 29(1) to enable testing of particular credit activities.

This follows on from my earlier remarks to the minister. The legislation provides exemptions for certain firms from some regulatory obligations. As I argued earlier, we think that these exemptions should only be available to firms that have products and services that are genuinely innovative and will benefit customers. It's the second part of the test that seems to me to be quite important, given the very large number of examples that we have available to us of innovation that in fact is not good for customers and is only good for businesses by virtue of exploiting customers. The amendment that's been circulated sets out a basic test that ASIC would apply. It would empower ASIC to prevent products and services that don't meet the innovation-and-benefit test from accessing the exemption.

We acknowledge that the government has issued draft regulations that incorporate a test that is like this, but the concern is that that really doesn't go far enough. I think that, as a matter of general principle, if the parliament is going to provide for regulatory exemptions in legislation it should also provide the baseline threshold of consumer protection in the same legislation, and that protection should be approved by parliament itself, not merely contained in subordinate legislation. It's our view that the test ought to be incorporated within the substantive legislation and that it should be an enduring protection for consumers, not one that can be changed by the minister.

Earlier in debate, Minister, you made the observation that regulations can be disallowed. That's true, but I think everyone here understands that a legislative protection is a more powerful protection than a protection contained in subordinate legislation. In an environment where trust in financial services is low, our view is that incorporating that protection into the primary legislation is an important step. It's hard to see what the objection to doing it would be. It doesn't create detailed implementation requirements for how exactly that test would apply in relation to any particular product. It merely establishes a benchmark, which is that there must be a benefit for consumers. I think that that safeguards the purpose of providing a sandbox. The sandbox isn't there just to encourage innovation; it needs to be connected to benefit. I also think that it provides an important reassurance that the public interest must always be established in any kind of regulatory relief. We want firms to innovate—of course we do—but we don't want to provide a backdoor for firms to avoid regulations that apply to the rest of industry.