By Janine Perrett

As if our banks need less regulation.

As if our regulator needs even more dubious entrepreneurs to ignore.

As if any sensible government would propose a policy that could even have the slightest chance of that outcome.

But that is my fear in a worst case scenario for the new fin tech regulation system the Government is announcing next week.

Oh it is a much heralded outcome of the big Innovation Statement of last year. Sooo last year - released early on and with great hopes before everything went pear-shaped for the new PM.

Anyway Treasurer Scott Morrison yesterday warned Australia's top regulators to get ready for a new system to regulate fintech start-up so budding entrepreneurs would not have to waste too much time on pesky financial regulations.

According to reports, start-ups will be able to test systems and products with real users; their numbers and transaction sizes would be limited. Participants would provide undertakings to ASIC and would have to comply with various rules on marketing, privacy, anti-money laundering compliance, disclosure, and management of conflicts of interest, but would not have to gain relevant ASIC licences until the company grew to a particular size, according to the model for the sandbox proposed by the industry. 

Already I'm worried when it says "proposed by the industry". 

Sounds great in theory as we move to that "agile" and "innovative" economy so beloved of Mr Turnbull.

Great in theory but we might need to be a little careful on detail given the potential for abuse. I mean it's not like we don't have a history of shonks and spivs in the financial sector.

Has anyone been watching the repeated allegations against Combank lately?

Has anyone watched the various Senate admonishments of the sector and calls for a clean-up?

Has anyone missed the growing calls for a Royal Commission into the sector, beginning at the apparently most heavily regulated top-end?

Sure this proposal applies to the smaller companies and once they grow bigger they would be subject to the same laws as the big guys. But given those laws don't seem to be working for the big guys do we really want them to start off without a framework of regulation.

Ignorance of or disregard for the rules would then become part of the culture. And while some think that culture needs to be changed that way, I'm not so sure.

If you think I'm being overly pessimistic or alarmist, look at this line in the stories yesterday.

It is understood the big banks are planning to argue that they, too, be given access to the sandbox to reflect they also are engaged in product innovation. 

Not only does that see to defeat the whole point of the concept, but I don't think we want the banks finding any new ways to avoid regulation.