Aussie MP and Assistant Treasurer Josh Frydenberg was quoted on new forms of finance this past week indicating peer to peer lending requires further regulatory oversight. This is according to a report in Mortgage Business. Frydenberg was quoted at the Stockbrokers Association of Australia Conference in Sydney stating;
“New technologies and business models have the potential to be both transformative and highly disruptive,” Mr Frydenberg said. “Will old regulatory frameworks work effectively in emerging environments? Will they stifle rather than facilitate innovation? Will they appropriately manage associated risks? The answers to these questions have changed rapidly over recent years as contemporary business models are challenged.”
Frydenberg has piped up previously on internet finance addressing crowdfunding and the forthcoming update to securities laws that guide the nascent industry. In a speech this past Spring Frydenberg stated;
“Innovation, much of it driven by technological change, has the potential to disrupt the status quo and significantly affect market structure. We have seen the growth of dark pools; and algorithmic and high frequency trading. We’re also seeing the emergence of crowdfunding and peer-to-peer lending. New technologies and business models have the potential to be both transformative and highly disruptive. Will old regulatory frameworks work effectively in emerging environments? Will they stifle rather than facilitate innovation? Will they appropriately manage associated risks?”
“While equity crowdfunding has potential benefits for entrepreneurs and investors, previous reviews have found that existing laws create a barrier to its use in Australia. The Government is aware that many stakeholders are keen for equity crowdfunding legislation to be introduced as soon as possible. It is important that we develop a model that facilitates a sustainable equity crowdfunding sector by appropriately balancing supporting investment, reducing compliance costs and maintaining investor protection.”
Australia was an early leader in the space with ASSOB blazing a trail for others to follow. Today the country has fallen a bit behind from a regulatory perspective as countries like the UK and New Zealand have pushed forward. A new legislative framework is expected later this year and industry followers remain hopeful on improvements that will create an ecosystem that will grow and provide greater access to capital where it is needed.