ARLINGTON, Va.–NAFCU has sent three different letters to regulators and policymakers stressing what it says is the importance of ensuring a level playing field for financial technology companies as they seek to participate in the consumer financial marketplace.
In the letters, NAFCU urges policymakers to take three critical steps to achieving a leveled playing field. The letters include:
Letter to Consumer Financial Bureau
NAFCU President and CEO Dan Berger urged the CFPB to undertake a rulemaking and exercise its supervision authority over non-depository fintech companies that fall within the scope of a “larger participant” in the consumer financial services market.
“The CFPB should use its authority under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) to oversee a grossly underregulated industry of fintech companies that offer consumers a wide array of products and services digitally, across state lines, ranging from mortgage servicing to mobile payments and peer-to-peer lending,” wrote Berger. “State-level supervision does not suffice as these fintech companies continue to grow exponentially by offering access to convenient online financial tools. The longer these companies go unchecked, the greater the risk of consumers facing a significant loss or violation of their rights.”
Letter to House Committees
In a letter to members of the House Financial Services and the House Energy and Commerce Committees, NAFCU called on the committees to examine the presence of technology companies in the consumer financial marketplace and the risk they pose to consumers and the financial system.
“NAFCU believes financial regulators have a role to play in the supervision and regulation of fintechs under their existing authorities. Congress should also be willing to step in and clarify the role of regulators when necessary as well,” NAFCU wrote. “For example, NAFCU believes that the Consumer Financial Protection Bureau (CFPB) can utilize its ‘larger participant’ authority under the Dodd-Frank Wall Street Reform and Consumer Protection Act to regulate and supervise technology firms and fintech companies that enjoy access to the financial services marketplace without the same supervisory expectations that apply to banks and credit unions.
“If the CFPB determines that supervision of fintech companies cannot be accomplished through its ‘larger participant’ authority under the Dodd-Frank Act, then Congress should consider granting the Bureau explicit authority to supervise and examine fintech companies…” the letter continues. “Congress should also consider creating a Federal Financial Institutions Examination Council (FFIEC) subcommittee on emerging technology (the subcommittee) to monitor the risks posed by fintech companies and develop a joint approach for facilitating responsible innovation.”
Letter to OCC
In its third letter, NAFCU called on the OCC to suspend approval and future processing of payments charter applications until a comprehensive chartering framework for non-deposit taking firms is formally proposed and made available for public comment.
“NAFCU believes that regulators, including the OCC, should not give preference to fintech as a new model of banking ready to replace traditional institutions, but rather seek to modernize traditional supervisory frameworks to ensure that the promise of better, more efficient service or expanded access to credit is predicated on responsible innovation rather than regulatory arbitrage,” the trade group stated. “We encourage the OCC to work with other FFIEC member agencies, including the National Credit Union Administration (NCUA), if it intends to introduce specialized chartering options that could impact overall sector stability.”