GAO Report Assesses Regulatory Oversight of Fintech Activities in US
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
Previous Article
HKMA Updates Guide on Enhanced Competency Framework for AML/CFTRelated Articles
|
News
FDIC Consults on Approach to Resolution Planning for IDIsFDIC approved an Advance Notice of Proposed Rulemaking (ANPR) and is seeking comment on ways to tailor and improve its rule requiring certain insured depository institutions (IDIs) to submit resolution plans.
April 22, 2019
WebPage
Regulatory News
|
|
News
FDIC Specifies Submission Timeline for FFIEC 031, 041, and 051 ReportsFDIC published the financial institution letters (FIL-21-2019 and FIL-22-2019) that offer guidance on submission of Call Reports FFIEC 051, FFIEC 041, and FFIEC 031 for the first quarter of 2019.
April 19, 2019
WebPage
Regulatory News
|
|
News
US Agencies Propose to Revise Call Reports FFIEC 031, 041, and 051US Agencies (FDIC, FED, and OCC) proposed to revise and extend, for three years, the Call Reports FFIEC 031, FFIEC 041, and FFIEC 051.
April 19, 2019
WebPage
Regulatory News
|
|
News
US Agencies Propose to Amend Rule on Supplementary Leverage RatioUS Agencies (FDIC, FED, and OCC) are proposing to revise the capital requirements for supplementary leverage ratio, as required by the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act.
April 18, 2019
WebPage
Regulatory News
|
|
News
EP Resolution on Proposal for Sovereign Bond Backed SecuritiesThe European Parliament (EP) published adopted text on the proposal for a regulation of the European Parliament and of the Council on sovereign bond-backed securities (SBBS).
April 16, 2019
WebPage
Regulatory News
|
|
News
HKMA Decides to Maintain Countercyclical Capital Buffer at 2.5%HKMA announced that, in accordance with the Banking (Capital) Rules, the countercyclical capital buffer (CCyB) ratio for Hong Kong remains at 2.5%.
April 16, 2019
WebPage
Regulatory News
|
|
News
EP Approves Agreement on Package of CRD 5, CRR 2, BRRD 2, and SRMR 2The European Parliament (EP) approved the final agreement on a package of reforms proposed by EC to strengthen the resilience and resolvability of European banks.
April 16, 2019
WebPage
Regulatory News
|
|
News
PRA Finalizes Policy on Approach to Managing Climate Change RisksPRA published the policy statement PS11/19, which contains final supervisory statement (SS3/19) on enhancing banks’ and insurers’ approaches to managing the financial risks from climate change (Appendix).
April 15, 2019
WebPage
Regulatory News
|
|
News
PRA Seeks Input and Issues Specifications for Insurance Stress TestsPRA announced that it will conduct an insurance stress test for the largest regulated life and general insurers from July to September 2019.
April 15, 2019
WebPage
Regulatory News
|
|
News
EBA Single Rulebook Q&A: First Update for April 2019EBA published answers to nine questions under the Single Rulebook question and answer (Q&A) updates for this week.
April 12, 2019
WebPage
Regulatory News
|
