OCC and CFPB Request for Legal Clarity on Issuance of Fintech Charters
Brian P. Brooks, the Acting Comptroller of the Currency at OCC, issued a statement endorsing the need for federal charters for fintech companies. The statement was issued on the release of a report from the CFPB taskforce. Mr. Brooks agreed with the conclusion of the report that the nation needs federal charters for fintech companies to effectively, efficiently, and safely serve the financial needs of consumers under a single uniform set of rules. The report also highlights the need for legal certainty about which agency (OCC or CFPB) is authorized to grant charters to fintech companies.
In the statement, Mr. Brooks mentioned that, under the law, OCC grants national charters to companies engaged in lending, payments, or deposit-taking. In its wisdom, Congress, in the Dodd-Frank Act, separated chartering and prudential supervision from consumer protection enforcement, assigning chartering authority to OCC and specific consumer protection enforcement authority to CFPB. According to the report, the Taskforce recommends that Congress either authorize CFPB to issue federal charters or licenses to non-bank fintech companies engaged in payments, remittances, or lending services, or clarify the authority of OCC. By making CFPB the licensing agency, Congress would assure that consumer protection concerns are at the forefront. The report highlights that OCC, which has a long history of evaluating and granting charters, recently took steps to issue charters to such companies engaged in lending and has announced its intent to do the same with money transmitters. These efforts are subject to legal uncertainty because of questions about whether a non-depository institution can engage in “banking” under the National Bank Act.
If Congress elects not to authorize CFPB to issue federal licenses, it should clarify that OCC has that authority. This alternative option would ensure that fintech companies operating nationwide are subject to a single set of laws. Moreover, it is noted that OCC has significant expertise in fintech in general and in these services specifically; thus, OCC may be well-positioned to supervise non-bank fintech companies with multistate operations. Regardless of which agency charters the fintech companies, the agency exercising that authority should pay careful attention to any capital requirements and other unnecessary or excessive regulatory burdens.
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Keywords: Americas, US, Banking, Fintech, Fintech Charters, Regulatory Capital, CFPB, OCC
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