Australia's Department of the Treasury published a consultation paper to gather stakeholder input for an independent review of the Enhanced Regulatory Sandbox (ERS), including views on whether Australia’s regulatory, policy and economic settings support financial innovation, how effective the ERS is in practice, and how it compares with global sandbox approaches. The paper describes the ERS, introduced on 1 September 2020 and administered by the Australian Securities and Investments Commission, as a mechanism for individuals and businesses to test certain innovative financial services or credit activities without first obtaining an Australian financial services licence or Australian credit licence, subject to eligibility and safeguards. Key design features include a maximum testing period of 24 months, activity restricted to eligible services and products, a total customer exposure cap of $5 million and (for certain products) a $10,000 cap on individual retail client exposure, alongside requirements such as compensation arrangements, membership of the Australian Financial Complaints Authority, and disclosure and conduct obligations. Uptake to date is described as limited, with 19 entities accepted from 103 applications, mixed outcomes for participants, and payments services as the predominant tested business model; the paper also canvasses issues raised by stakeholders such as ambiguous objectives, low thresholds, lack of a structured pathway to licensing, and limited interaction or information exchange with ASIC during testing. Submissions are due by 6 February 2026 and will be used to inform the independent reviewer’s findings; the consultation follows the Government’s announcement of the terms of reference and the appointment of Ms Maha El Dimachki as reviewer, with the final report due to Government six months after the review commences.

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