US Treasury Publishes Report on Nonbank Financials, Fintech, and Innovation
The U.S. Department of the Treasury released its report on Nonbank Financials, Fintech, and Innovation. The FinTech report is the fourth in a series mandated by U.S. President Donald Trump’s Executive Order 13772 on Core Principles for Regulating the United States Financial System. The report groups Treasury’s recommendations into four principal categories: (i) adapting regulatory approaches to changes in the aggregation, sharing, and use of consumer financial data, and to support the development of key competitive technologies; (ii) aligning the regulatory framework to combat unnecessary regulatory fragmentation, and account for new business models enabled by financial technologies; (iii) updating activity-specific regulations across a range of products and services offered by nonbank financial institutions; and (iv) advocating an approach to regulation that enables responsible experimentation in the financial sector, improves regulatory agility, and advances American interests abroad.
With respect to the first of these categories, Treasury recommends revisions to the Telephone Consumer Protection Act and Fair Debt Collection Practices Act; increased transparency and consumer access and control over consumer financial account and transaction data—including the enactment of a federal data security and breach notification law; and considerations with respect to the use of cloud technologies, big data and machine learning in financial services. With regard to the alignment of the regulatory framework to promote innovation, Treasury makes a number of recommendations to improve the clarity, transparency and efficiency of the regulatory framework applicable to financial institutions, including recommending that the U.S. Office of the Comptroller of the Currency move forward with its FinTech charter program and that the U.S. Board of Governors of the Federal Reserve System consider redefining the concept of bank holding company control to provide a streamlined and more efficient standard. With respect to the update of activity-specific regulations, the report makes a number of recommendations in the areas of lending and servicing (including recommendations related to mortgage lending and servicing, student lenders and servicers, debt collection and short-term, small-dollar lending), payments, and wealth management and digital financial planning. With respect to establishing a policy environment that promotes and encourages innovation, the report recommends creating a regulatory sandbox to promote experimentation and innovation, agile and effective regulation of the financial system, addressing and accounting for cybersecurity and other infrastructure considerations, and international engagement to promote U.S. interests abroad and align U.S. regulatory standards with those of other countries and international organizations. The report notes that many of these recommendations can be facilitated through the federal agency rulemaking process, although some may require congressional action to implement.
View full report.
View abbreviated fact sheet regarding the report.TOPIC: FinTech