FinTech Industry Now Higher On U.S. Government Radar
The rapid growth of the FinTech industry in the past few years has largely escaped extensive regulation. However U.S. administration and regulatory agencies are looking to increase their scrutiny of the industry, with a number of officials now being dedicated to the FinTech industry.
On their part, FinTech companies are responding with forming lobbies to help them handle the administration’s concerns. Typically government policymakers have to tread a fine line so as to ensure that there is enough regulation to protect consumers and avoid meltdowns but not so much that it hampers innovation which can result in new or cheaper services.
The recent turmoil in the U.S. peer-to- peer lending company Lending Club has underlined the vulnerability of the FinTech industry and the possible need for more oversight. While there is no specific regulation that is being pushed for, financial officials believe that a number of questions need to be addressed before a full set of robust regulations can be developed.
In a statement, Thomas Curry, Comptroller of the Currency, said,
Are these companies providing products and services that banks are authorized to offer? What are the prudential requirements for these types of institutions? How does the innovation promote financial inclusion?
Officials across key government agencies are now working to tackle these issues. Lael Brainard, a governor with the U.S. Fed is handling the central bank’s FinTech initiatives which include a working group comprising of experts from the financial stability, payment systems and information technology sectors.
Some of the other officials who will concentrate on the FinTech industry include Amy Friend, Office of the Comptroller of the Currency’s chief counsel, Doreen Eberley, director of the FDIC’s risk management supervision division, Dan Quan, a senior adviser to the director of Consumer Financial Protection Bureau and Jessica Milano and Melissa Koide, deputy assistant secretaries at the Treasury.
Many in the FinTech industry state that there are no regulations governing the industry due to the numerous state and federal rules on areas such as debt collection, credit reporting, consumer lending, and money transfers that they need to abide by.
But officials fear that this might not be enough. Teresa Curran, a senior San Francisco Fed official, stated in a speech on FinTech earlier this year that the existing regulations or rules may not be suited to handle the new types of risk generated by the nascent industry.
In response FinTech companies are organizing themselves into lobbies to handle these concerns. The latest FinTech lobby to be set up is the Innovative Lending Platform Association representing OnDeck, Kabbage, and CAN Capital. There are two other FinTech lobbies that have already been established and are the Marketplace Lending Association composed of Funding Circle, Prosper and Lending Club, and Financial Innovation Now which is a payments focused lobby group representing Amazon, Apple, Intuit, PayPal and Google.
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