ASIC not supporting innovators, say marketplace and P2P lenders

Entrepreneurs in the financial services industry are not convinced that the Australian Securities and Investments Commission is doing everything it can to support innovative businesses in the sector, despite the assurances of senior ASIC officers in recent months.

Speakers on a panel of peer-to-peer and marketplace lenders at AB&F's Retail Financial Services Forum in Sydney yesterday said that dealing with ASIC was slow, and described the regulator as "cautious" and prone to a "box-ticking" approach.

Earlier this year, ASIC chairman Greg Medcraft said the regulator was building an innovation hub to assist start-ups navigate the regulatory system.

The hub has been designed to streamline licence application processes, provide dedicated contacts within ASIC for innovative businesses and offer live webchat facilities.

"We are open for business to help innovative companies," Medcraft told delegates at ASIC's annual forum in March.

In a speech last month, ASIC commissioner Greg Tanzer said the regulator was keen to do what it could to help industry take advantage of the opportunities on offer, "provided it does not compromise investor and financial consumer trust and confidence."

Tanzer said ASIC would participate in the fintech hub Stone and Chalk and would establish a Digital Finance Advisory Committee with members from a cross-section of the fintech community.

"We are committed to doing what we can to facilitate - and make ourselves more accessible to - innovative businesses that genuinely benefit customers," Tanzer said.

From the industry side, the chief executive of peer-to-peer lender MoneyPlace, Stuart Stoyan, said he had spent a lot of time working with ASIC on the launch of his business, which is scheduled to start operating in the September quarter.

Stoyan said: "The regulator is very cautious. This is a new asset for investors and the fractionalisation of loans is also new. These businesses, which might require an Australian Credit Licence and an Australian Financial Services Licence, do not fit easily into the standard regulatory regime."

The executive chairman of marketplace lender DirectMoney, Stephen Porges, questioned whether what his company was doing was so different that it required such specific focus from the regulator.

Porges said: "It is a new way of banking using technology but it is just banking. We are bankers."

Graham Andersen, the founder and chief executive of Morgij Analytics, a provider of risk management tools to the finance industry, said his experience of dealing with ASIC was a "box ticking" exercise.

"We have not ever had a chance to have a discussion. If you don't tick the boxes you have a problem. It is very difficult for us," Andersen said

Stoyan said that things have been changing since the launch of ASIC's innovation hub and there were promising signs.

Not everyone had a negative view of the regulator. SocietyOne chief executive Matt Symons said: "We have had an excellent relationship with the regulator. They have been very forward looking, very engaged and sympathetic."