To create a financial regulatory sandbox system, the Statute for the Development and Innovative Experiment of FinTech (hereinafter, the “Statute”) was adopted during the 15th Meeting of the 4th Session of the 9th Term Legislative Yuan on December 29, 2017. The Statute is highlighted below:
I. The composition of the competent authority and examiners in the financial regulatory sandbox system is specifically stipulated.
Article 2 of the Statute stipulates that the competent authority shall be the Financial Supervisory Commission (hereinafter, the “FSC”). Chapter 2 of the Statute specifically stipulates that with respect to the examination application for an innovative financial experiment, a natural person, sole proprietorship or partnership, or juristic person (hereinafter, the “Applicant”) may apply to the competent authority for approval of an innovative experiment, including financial services engaged through technological innovations or an approach innovative in terms of business model. The FSC is required to call an examination meeting upon application. The examiners will consist of government officials, external experts and scholars. For the sake of political accountability and innovation, the number of external experts and scholars cannot account for the majority of the members of the examination meeting, provided that such number shall not account for less than one third of the members.
II. The period of an innovative experiment is specifically stipulated.
Article 9 of the Statute provides that the period of an innovative experiment approved by the FSC shall be limited to one year. An Applicant may submit reasons to apply for an extension one month prior to the expiration of such innovative experiment period. The extension shall be limited to one filing and shall not exceed 6 months at the longest. However, if an innovative experiment involves any law that should be amended, the extension shall not be limited to one filing, but the period of the entire innovative experiment shall not exceed three years. The FSC shall make a decision to approve or reject the above application before the period of innovative experiment as originally approved expires and communicate the decision in writing to the Applicant.
III. The supervisory and administrative mechanisms are specifically stipulated.
Chapter 3 of the Statute contains provisions concerning the supervision and administration of innovative experiments. In particular, Article 15 of the Statute provides that in the event of any matter materially unfavorable to the financial market or the rights or interests of participants, or if the scope of the competent authority’s approval is exceeded, or the additional burden or relevant handling requirements are violated without rectification during a stated period set forth in a notice demanding rectification during the period of innovative experiment, the approved application may be revoked.
IV. The protection of the participants in an innovative experiment is specifically stipulated.
Chapter 4 of the Statute specifically provides for the protection of the participants in an innovative experiment. In particular, Article 21 of the Statute provides that a contract on the provision of financial products or services executed between an Applicant and a participant during the period of innovative experiment shall follow the principles of fairness, reasonableness, equality and reciprocity, and good faith. Article 23 provides that the Applicant shall provide proper protective measures and mechanisms for exiting the innovative experiment, specifically stipulate in the contract the scope of the innovative experiment, rights and obligations and relevant risks, specifically communicate the same to the participants before the contract is executed and obtain their consent. The performance of the explanation duty is governed by Article 10 of the Financial Consumer Protection Law. In case of any violation, a participant may claim damages in accordance with Article 11 of the Financial Consumer Protection Law. The gathering, processing and use of information about the participants by an Applicant shall meet relevant provisions concerning the Personal Data Protection Law. For any civil dispute arising from any financial product or service between an Applicant and a participant under Article 24 of the Statute, the participant may file a complaint with the Applicant and apply to the Financial Ombudsman Institution for mediation in accordance with Article 13, Paragraph 2 of the Financial Consumer Protection Law.
V. The application and exemption of laws and regulations are specifically stipulated.
Chapter 5 of the Statute specifically stipulate the laws and regulations excluded from innovative experiments and the exemption requirements. In particular, if the scope of an innovative experiment involves laws and regulations prescribed by the competent authority or other agencies, the competent authority may consult with such other agencies and, subject to their approval, approve that the period of innovative experiment may be exempt from business provisions concerning permission or approval under relevant financial laws such as the Banking Law, the Statute for the Administration of Electronic Payment Institutions, the Statute for the Administration of the Issuance of Electronic Tickets, the Trust Enterprise Law, the Law Governing Bills Finance Business, the Securities and Exchange Law, the Futures Trading Law and the Insurance Law. In addition, relevant criminal and administrative liabilities of the Applicant are also exempt. However, the Anti-money Laundering Law, the Law for Preventing the Financing of Terrorism and relevant laws, regulations or directives shall not be excluded.