Financial
Products and Platforms

Building new financial products within the Australian regulatory framework is not unlike a game of Tetris - once you work out the features you need, you need to break them down into building blocks and work out the best way to fit them together. It’s fairly rare for all of a product’s features to be provided by a single provider, so most innovative new products are generally a collaboration of providers, bound together through a central set of legal and regulatory documents. It’s an area where there is scope for elegant legal design to add tangible value.

Most innovative new products are generally a collaboration of providers, bound together through a central set of legal and regulatory documents. It’s an area where there is scope for elegant legal design to add tangible value

— Nik Albrecht, Principal

Are you looking to build a product, or add a new feature?

You will probably need an AFSL - but the authorisations will vary considerably based on the partners you are planning to work with

While it’s certainly possible for one licensee to provide everything, there are a few areas in particular which come with a higher regulatory burden and can be inefficient for a non-specialist to provide. For example:

  • Custody - holding client assets comes with capital requirements and complex client money obligations.

  • Retail MIS - if you are using a trust structure and intend to market to retail, you will need a Responsible Entity, and creating your own is a significant undertaking;

  • Trading financial products - if your product involves trading securities (or other products), you will generally want access to a market participant, at least for execution, clearing and settlements - both in Australian and any other jurisdiction you are looking to offer (e.g. US shares);

  • FX - if your product has an overseas component, you will often need the ability to convert funds into other currencies;

  • Payments and banking - many of the newer products are offering more advanced payment features, for instance real time payments - or perhaps even digital wallet functionality;

  • Onboarding and AML - to provide a seamless experience, you will want an automated onboarding process, including AML verification.

AB can help you plan your product and assemble the pieces

From a legal perspective, there are few documents that you’ll typically need:

  1. A Structuring Advice that sets out the features of your product, what your regulatory requirements are, and what authorisations you will need;

  2. An AFSL Application, variation, or Corporate Authorised Representative arrangement to obtain those authorisations;

  3. A set of Terms and Conditions that sets out how the product will work with respect to your customers and your partners;

  4. A Financial Services Guide, and sometimes a Product Disclosure Statement;

  5. Various Service Provider Agreements that set out how you will work with your partners;

  6. If you have an AFSL, you will need to put some compliance arrangements in place, including with respect to AML - note that at AB we offer ongoing compliance support packages to cover off all your obligations on an ongoing basis.

Why use AB?

Our clients in this area range from tech startups through to ASX 20 companies, and we take care to tailor our approach to the size and circumstances of every client. Our core value proposition is that we offer top-tier expertise combined with the commerciality of a start-up, all at boutique rates.

This is an area where technical expertise varies considerably, and a commercial approach is vital as the legal solutions absolutely need to reflect the commercial features and objectives of each individual product. At AB, we pride ourselves on being a commercial partner as much as a legal adviser.


Next Steps?

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