General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
March 22, 2018

The U.S. GAO published a report that assesses the regulatory oversight in the fintech landscape in the United States and offers recommendations for improvement. In written comments on a draft of this report, the agencies stated that they concurred with the GAO recommendations and would take responsive steps. GAO made recommendations for improving inter-agency coordination on fintech, addressing competing concerns on financial account aggregation, and evaluating whether it would be feasible and beneficial to adopt regulatory approaches similar to those undertaken by regulators in jurisdictions outside of the United States.

The GAO report assessed fintech benefits, risks, and protections for users; regulatory oversight of fintech firms; regulatory challenges for fintech firms; and the steps taken by domestic regulators and regulators in other countries to encourage financial innovation.  The report concludes that fintech products pose similar risks as traditional products, but their risks may not always be sufficiently addressed by existing laws and regulations. It was also noted that fintech activities create data security and privacy concerns and could potentially impact the overall financial stability as fintech grows. The extent to which fintech firms are subject to federal oversight of their compliance with applicable laws varies. The U.S. regulatory structure poses challenges to fintech firms. With numerous regulators, fintech firms noted that identifying the applicable laws and how their activities will be regulated can be difficult. Although regulators have issued some guidance, fintech payment and lending firms say complying with fragmented state requirements is costly and time-consuming. Given their mandated consumer protection missions, regulators could act collaboratively to better ensure that consumers avoid financial harm and continue to benefit from these services.

In the report, GAO identified leading practices for inter-agency collaboration, including defining agency roles and responsibilities and defining outcomes. Implementing these practices could increase the effectiveness of regulatory efforts to help resolve this conflict. Regulators abroad have taken various approaches to encourage fintech innovation; these include establishing innovation offices to help fintech firms understand applicable regulations and foster regulatory interactions. Some use regulatory sandboxes that allow fintech firms to offer products on a limited scale and provide valuable knowledge about products and risks to both firms and regulators. Regulators abroad have also established various mechanisms to coordinate with other agencies on financial innovation. While some U.S. regulators have taken similar steps, others have not, due to the concerns related to favoring certain competitors or perceived lack of authority. While these constraints may limit regulator ability to take such steps, considering these approaches could result in better interactions between U.S. regulators and fintech firms and help regulators increase their understanding of fintech products. This would be consistent with the GAO framework calling for regulatory systems to be flexible and forward-looking to help regulators adapt to market innovations.

 

Related Links

Keywords: Americas, US, Banking, Securities, Fintech, Regulatory Oversight, GAO

Related Insights
News

APRA Authorizes New Restricted Authorized Deposit Taking Institution

APRA announced that it has authorized Xinja Bank Limited as a restricted authorized deposit-taking institution (Restricted ADI) under the Banking Act 1959.

December 18, 2018 WebPage Regulatory News
News

US Agencies Propose Derivative Counterparty Credit Exposure Framework

US Agencies (OCC, FED, and FDIC) proposed to implement a new approach for calculating the exposure amount of derivative contracts under the regulatory capital rule.

December 17, 2018 WebPage Regulatory News
News

HKMA Announces Intention to Consult on Updated BCBS Disclosure Rules

HKMA announced that it will consult the industry in due course on the relevant implementation proposal to give effect to the disclosure requirements of the December 2018 package by BCBS.

December 17, 2018 WebPage Regulatory News
News

EBA Finalizes Guidelines on Disclosure of Non-Performing Exposures

EBA published the final guidelines on disclosure of non-performing and forborne exposures.

December 17, 2018 WebPage Regulatory News
News

HKMA Issues and Revises Reporting Forms Under the IRRBB Framework

HKMA issued a revised version of the Supervisory Policy Manual (SPM) IR-1, with an updated title “Interest Rate Risk in the Banking Book” (IRRBB).

December 14, 2018 WebPage Regulatory News
News

EBA Single Rulebook Q&A: Second Update for December 2018

EBA published answers to six questions under the Single Rulebook question and answer (Q&A) updates for this week.

December 14, 2018 WebPage Regulatory News
News

OSFI Proposes Changes to Guideline on Large Exposure Limits

OSFI proposed revisions to the Guideline B-2 on Large Exposure Limits, for implementation in the first quarter of 2020.

December 13, 2018 WebPage Regulatory News
News

BCBS Consults on Disclosure Rules for Leverage Ratio Window-Dressing

BCBS published a consultative document on revisions to the leverage ratio disclosure requirements to address the leverage ratio window-dressing behavior.

December 13, 2018 WebPage Regulatory News
News

PRA Updates the Policy on Approach to Systemic Risk Buffer

PRA published the final Statement of Policy on the PRA approach to the implementation of the systemic risk buffer (SRB), as proposed in the consultation paper CP29/18.

December 13, 2018 WebPage Regulatory News
News

EP Report Examines Financial Supervision and Regulation in US

European Parliament published a report that provides a concise overview of the Dodd-Frank Act, the challenges of its implementation, and efforts to roll back the Act, in large part due to what are viewed to be vague and impractical provisions.

December 12, 2018 WebPage Regulatory News
RESULTS 1 - 10 OF 2343