The Financial Supervisory Commission yesterday said it has finalized a draft bill for a “regulatory sandbox,” with additions aimed to address concerns voiced by several financial technology (fintech) developers.
The commission said the Executive Yuan is expected to send the draft bill to the legislature for review before the end of this month and that it hopes it will be passed into law before the end of this year.
The regulatory sandbox is to give financial institutions and technology firms room to experiment with new fintech ideas.
The experimentation with innovative technology is aimed at speeding up development of new services by allowing for exemptions on regulatory rules and legal liabilities during tests conducted within a limited scope to prevent widespread adverse effects to consumers.
The changes provide a longer adjustment period to satisfy regulatory compliance, and fintech developers would be subject to mediation and reasonable settlement terms recommended by the Financial Ombudsman Institution in the event of a widespread dispute with consumers.
The institution said that it would work with regulators to determine appropriate settlement amounts, adding that affected consumers may also choose to file lawsuits.
Settlement recommendations are only binding if developers have inked an agreement with the institute, it said.
However, developers have voiced concerns in two public hearings held last month, drawing attention to the prospects of adjusting to regulations as they step out of the sandbox after the conclusion of trial runs.
Further progress to commercialization of new services might be hampered if regulatory changes cannot keep pace, developers said.
Developers said they are at risk of having their projects stranded in limbo, leaving them unable to generate returns on expenses and investments.
The commission said that it would provide adjustment periods of between six months and one year for developers to accommodate a potential lag in regulatory amendments.
LOWER REQUIREMENTS
In addition, in consideration of the smaller scale of most fintech developers, capital requirements are set between NT$200 million and NT$300 million (US$6.44 million and US$9.66 million), which is significantly lower than the NT$10 billion requirement for commercial banks, the commission said.
The commission also advised developers to work with its fintech legal consultation contacts and design their experiments to match the regulations to reduce dependency on amendments.
However, developers said that the draft bill might not be able to overcome compliance hurdles when services involve other industries.
For example, insurance services might involve healthcare and medical laws, developers said, calling for greater participation by other government departments.
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