Sens. Brown, Merkley Want More Info From Regulators About Fintech Oversight

Sens. Sherrod Brown and Jeff Merkley called on financial regulators to provide more information about their oversight of fintech companies, while raising concerns that a murky framework could be harmful to consumers and small businesses.

Brown, the ranking member of the Senate Banking Committee, and Merkley, the top Democrat on the panel’s subcommittee on financial institutions and consumer protection, made their request in aletter addressed to the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., the National Credit Union Administration and the Consumer Financial Protection Bureau.

The senators said they want to know how the regulators have studied various forms of fintech, the agencies’ respective roles in overseeing the industry and their views on how the firms impact the institutions they regulate.

“If a fintech company is neither directly regulated by your agencies nor a third party service provider, there are concerns that applicable federal consumer laws may not extend to consumers engaging with fintech companies, and that consumers or small business owners may not understand that protections provided by federal financial institutions do not apply to the products and services offered by these companies,” Brown (Ohio) and Merkley (Ore.) wrote. “These companies are changing financial services, and it is vital that the regulators and Congress understand all the impacts and take actions as appropriate.”

The rise of fintech firms is posing challenges to regulators, lawmakers and industry leaders as agencies try to determine its place in the financial regulatory structure. The OCC is considering a limited-purpose banking charter for fintech firms, which some Republican lawmakers said could provide “regulatory clarity.”

Brown and Merkley highlighted technologies such as blockchain, marketplace lending and virtual currencies in their letter, noting variations in fintech firms’ functions and their relationships to banks.

“Some fintech companies have formed formal partnerships with financial institutions while others may interact with depository institutions less formally, such as through the payment system,” the senators wrote.