Additional Regulatory Support for Financial Innovation. Last week, the Roundup reported that the Office of the Comptroller of the Currency (OCC) would begin accepting applications for special purpose national bank charters (FinTech Charter) from FinTech companies engaged in the business of banking, and that the U.S. Treasury Department issued a report which, among other matters, recommends that federal and state regulators work to establish a system similar to a “regulatory sandbox” to invite innovations from new and existing market participants and endorses the OCC FinTech Charter. On the heels of these developments, the Consumer Financial Protection Bureau (CFPB) this week announced collaboration with 11 international regulators to create a Global Financial Innovation Network to support responsible financial innovation. After a long debate, U.S. financial regulators appear to have come down in support of actively encouraging financial innovation. Additional details regarding these and other developments are covered below.

Regulatory Developments

CFPB Announces Collaboration With International Regulators to Create Global Financial Innovation Network

On August 7, the CFPB announced that it was working in collaboration with 11 financial regulators and related organizations on an initiative to create the Global Financial Innovation Network (GFIN). The GFIN builds on the concept of a “global regulatory sandbox” proposed by the United Kingdom Financial Conduct Authority in February 2018 and will seek to provide a more efficient way for innovative firms to interact with regulators, helping them navigate between countries as they look to scale new ideas, and will also create a new framework for cooperation between financial services regulators on innovation-related topics. The collaborative effort is organized around a draft Consultation Document, which sets out the three main proposed functions of the GFIN:

• act as a network of regulators to collaborate and share experiences of innovation in respective markets, including emerging technologies and business models;
• provide a forum for joint policy work and discussions; and
• provide firms with an environment in which to trial cross-border solutions.

The CFPB and the other regulators are seeking views on the mission statement for the GFIN, its proposed functions, and where it should prioritize activity. In the United States, interested parties can provide feedback to the CFPB’s new Office of Innovation by October 14, 2018.

Client Alert: OCC Announces It Will Accept Applications for FinTech Charter; Treasury Department Releases FinTech Report

The OCC has announced that it will accept applications from FinTech companies seeking to charter a national bank. In a separate action, the U.S. Treasury Department released a report in which it endorsed regulatory sandboxes and made other recommendations intended to promote FinTech. For more information, read the client alert issued by Goodwin’s FinTech practice.

Enforcement & Litigation

Fifth Circuit Panel Concludes FHFA Single-Director Structure Is Unconstitutional

On July 16, in Collins et al. v. Federal Housing Finance Agency et al. (No. 17-20364), a Fifth Circuit panel ruled that the single-director structure of the Federal Housing Finance Agency (FHFA) is unconstitutional. The ruling comes on the heels of the Southern District of New York’s CFPB v. RD Legal Funding LLC decision (2018 WL 3094916 (S.D.N.Y. June 21, 2018)), in which the court reached a similar result with respect to the CFPB, determining that its single-director structure was unconstitutional. In reaching its decision, the Collins court examined the FHFA’s composition, and balanced Congress’s intent to create an independent agency against the constraints the structure imposed upon the president’s Article II powers. View the LenderLaw Watch blog post.