The Australian Securities and Investments Commission will have greater flexibility in its administration of the fintech sandbox regulatory licensing exemption, following the passage of legislation last week.The regulatory sandbox is designed to allow companies to test new and innovative fintech products and services without the need for an Australian financial services licence or an Australian credit licence.When the sandbox scheme was launched in 2016, the licensing exemption was for 12 months with up to 100 retail clients and total exposure of no more than $5 million.At the time, ASIC said it recognised that start-up businesses face a couple of problems when dealing with regulators: the regulatory process slows their speed to market; and they may lack required organisational competence to provide a licensed financial service.But with its fairly limited scope there was not a lot of take-up. The new law is designed to enhance the regulatory sandbox by allowing more businesses to test a wider range of products and services, and for longer periods than 12 months.The explanatory memorandum accompanying the bill says: "The new regulation recognises that innovation is not limited to new offerings previously unseen in the market, but may encompass improvements to specific elements of a product or service, draw on practices from other industries or combine elements together in new ways to deliver benefits to consumers."ASIC has the power to make decisions regarding when exemptions start and finish. The regulator also has the power to cancel a licensing exemption if the company fails to meet prescribed conditions."ASIC can respond to identified non-compliance with prescribed conditions and prevent misconduct or fraudulent behaviour in the business's provision of products or services to consumers," the explanatory memorandum says.The new law also gives the government flexibility to change regulations in response to market conditions. And it includes a requirement that the relevant minister arrange for an independent review of the scheme.