Newsroom
NAFCU offers support for expanded CFPB supervision over fintechs, other nonbank companies
NAFCU Regulatory Affairs Counsel James Akin wrote a letter to the CFPB Tuesday in response to its announcement that it would begin exercising supervisory authority over fintechs under a largely unused legal provision of the Dodd-Frank Act to examine nonbank financial entities that pose risks to consumers. In addition, the letter discusses the related procedural rule that would allow the bureau to make final decisions and orders from its supervision of these nonbank entities public. Akin addresses the benefits that consumers and the consumer finance market will see as a result of the increased transparency provided by the procedural rule.
In the letter, Akin reiterates that NAFCU supports both the decision to exercise supervisory authority of nonbank entities that pose a risk to consumers and the proposed procedural rule to provide the bureau with a mechanism to release final orders and decisions from the risk determination. In addition, Akin highlights the risks that “underregulated market players,” like fintechs, can pose to consumers and the need for increased supervision.
“NAFCU encourages all relevant regulators to ensure that when fintechs compete with traditional financial institutions, they do so on a level playing field where smart regulations and consumer protections apply to all actors in the consumer marketplace,” wrote Akin.
Of note, Akin characterizes the bureau’s exercise of both the supervision and the release of documents as positive first steps, but emphasizes the need for exercising its “larger participant” authority, and suggest that it do so over peer-to-peer payment providers and buy-now-pay-later lenders.
NAFCU has long advocated for this change to both the CFPB and Congress. Of note, NAFCU wrote a letter earlier this year to the CFPB on its 2022-2026 strategic plan offering suggestions for a fair landscape with fintechs. In addition, NAFCU President and CEO Dan Berger sent a letter in 2021 asking the CFPB to enhance its supervision of nonbank fintechs to better level the playing field with credit unions.
Read the letter. NAFCU will continue to monitor the CFPB’s actions on this procedural rule and will continue advocating for a level playing field for credit unions.