Advances in technology in insurance and the wider financial services industry will not allow firms to shirk their accountability, a regulator has said.
Speaking at the 4th annual Fintech Summit, held in Sydney last week, John Price,
ASIC commissioner, stressed that accountability remains vital for financial services businesses as they move into more technological offerings.
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“No matter how far technology and innovation goes, and how intelligent machines become, at the end of the day, people need to remain responsible for the products and services they sell and the decisions they make,” Price told attendees.
“It is our view that technology should be used to improve experiences and achieve efficiencies, but it is not an excuse for financial business to shift risk to consumers or other parts of society without being very clear that is happening. This is particularly important as we move into ever-increasing automation and machine based decision making.”
While the idea of technology changing the financial services industry is not new, current trends “have really shifted gears.”
“We are undeniably in a fintech moment,” Price told attendees. “The forces that are driving this fintech moment – consumer demand, trust and technology – are also bringing risks.”
Price noted that the regulator looks at four components in its dealings with tech companies: flexibility and adaptability to the speed and nature of change; “resisting temptation” to move before understanding developments; ensuring regulatory responses to technology are neutral; and ensuring that ASIC has the skills and expertise to offer effective legislation.
“Our overarching aim is to maintain sensible and appropriate frameworks that harvest the benefits of innovation while fostering consumer trust and confidence in financial services,” Price said.
“When it comes to regulating for fintech, we are faced with the challenge of striking a balance between our commitment to encouraging innovation (and all of the opportunities created by fintech) without compromising on the proper regulation of financial products and services.”
During his speech, Price lifted the lid on the regulatory sandbox which allows tech businesses to enjoy lighter touch regulation while offering consumers the same protection of a fully regulated entity.
Price noted that the sandbox allows eligible fintech businesses to test certain ideas without a financial services license due to a class waiver which lasts 12 months.
“We have taken a white-list approach,” Price said. “That means there is no ASIC review of each proposed product or service and we are not involved in selecting applicants and negotiating individual testing terms for people using the class waiver.
“However, customers of these fintech businesses will still have fundamental protections under the law, such as dispute resolution and professional indemnity insurance.”
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