The Australian Securities and Investments Commission (ASIC) has set out its guidance for insurtechs and financial services providers who want to test innovative products under new regulations that will kick in tomorrow.

The new “enhanced regulatory sandbox” laws exempt firms from having to hold an Australian Financial Services License or Australian credit licence if they meet certain criteria, and is aimed at fostering innovation in the sector.

To qualify, a firm must pass the public benefit and innovation tests and there are also limitations on what financial services and products can be provided, ASIC said.

There is a $10,000 individual cap on the value of certain retail-focused financial services and an aggregate $5 million total exposure limit for all financial services provided to and credit activities engaged in with clients.

“ASIC’s guidance is intended to help businesses understand how the enhanced sandbox works, including their obligations to consumers, how it may be applicable to them and how to apply to make use of the sandbox,” Commissioner Cathie Armour said.

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