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Pitcher Partners has welcomed industry proposals for a ‘regulatory sandbox’ scheme for fintech start-ups, urging the government to consider and embrace the idea.
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Pitcher Partners lauds fintech ‘sandbox’ scheme
16 March 2016
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Alexis Kokkinos, partner and executive director of tax consulting for Pitcher Partners, said the biggest issue when dealing with clients in the fintech start-up space is the simple fact that they are cash poor.
“The regulatory requirements that fintech start-ups are forced to comply with, just to get their product to market, ends up sucking up seed funding. This is a significant barrier to entry into the fintech space, and makes it harder for founders to concentrate on the process of bringing their product to market,” said Mr Kokkinos.
“A regulatory sandbox scheme could provide a regulated, shrunken marketplace that could allow fintech start-ups an ability to test their model and product in a controlled yet realistic environment.”
Mr Kokkinos noted that it was particularly pleasing to see that the Treasurer may be willing to embrace the scheme as progress comes to light.
“Many investors are reluctant to invest in a start-up until you have a ‘proven concept’ – it’s been to market, it’s been tested,” he said.
“Unfortunately this can stifle innovation, as fintech start-ups continue to struggle with funding. We want to make sure the government is doing everything in its power to ease the regulatory burden on our innovators, who will ultimately drive economic growth in Australia.”
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Mr Kokkinos concluded by stating that the necessity of ensuring any future sandbox regulatory provisions would be simple from a compliance perspective.
“Government would need to ensure that sandbox provisions are straightforward and easy to comply with. Start-ups are driven by smart, innovative people, but they usually lack the regulatory knowledge and access to be able to navigate and apply all the relevant ASIC and Corporations Act requirements.”
He added: “The last thing you would want is to make a regulatory sandbox that is complicated, as it would defeat the purpose of having such a regime."
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