U.S. Treasury Department Issues White Paper on Online Marketplace Lending Industry
On May 10, 2016, the Department of the Treasury issued a white paper on online marketplace lending that maps the current market landscape, reviews industry insights and offers policy proposals for the road ahead. Based on approximately 100 responses from online marketplace lenders, financial institutions, investors and other key industry figures, the Treasury, in consultation with the CFPB, FDIC, Federal Reserve Board, FTC, OCC, SBA and SEC, made several notable recommendations and observations.
The white paper explores policies that would expand regulatory oversight, including standardized representations and warranties in securitizations, pricing methodology standards, the implementation of a registry for tracking data on transactions and the reporting of loan-level performance, among others. In addition, the Treasury mentions potential cybersecurity threats, anti-money laundering, the uneven protections and regulations in place for small business borrowers and the growth of the mortgage and auto loan markets as some of the emerging trends to monitor. The Treasury is also considering the role of federal agencies in regulating these areas, including the formation of an interagency working group for online market place lending. Press Release. White Paper.
The SEC is Seeking Comment on a Joint Agency Proposed Rule Relating to Incentive-based Compensation Arrangements
On May 6, 2016, the Office of the Comptroller of the Currency, Treasury (OCC), the Board of Governors of the Federal Reserve System (Board), the Federal Deposit Insurance Corporation (FDIC), Federal Housing Finance Agency (FHFA), the National Credit Union Administration (NCUA), and the U.S. Securities and Exchange Commission (SEC) issued and sought comment on a joint proposed rule to implement section 956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) relating to the prohibition on and the disclosure of information of incentive-based compensation arrangements. The deadline for comments is July 22, 2016. Notice of Proposed Rulemaking and Request for Comment.
U.S. Treasury Announces Customer Due Diligence Final Rule for Financial Institutions
On May 5, 2016, the U.S. Department of the Treasury announced a Customer Due Diligence (CDD) Final Rule that requires financial institutions to conduct certain diligence to verify personal information of beneficial owners of legal entity customers. The final rule under the Bank Secrecy Act was published in the Federal Register on May 11, 2016 and becomes effective July 11, 2016. Press Release. Final Rule.
CFPB Proposes Prohibition on Mandatory Consumer Arbitration Clauses
On May 5, 2016, the Consumer Financial Protection Bureau (CFPB) issued and sought comment on proposed rules prohibiting mandatory arbitration clauses that deny groups of consumers their day in court. Under the proposed rules, companies would be prohibited from putting mandatory arbitration clauses in new consumer contracts that would prevent consumers from bringing class actions. Comments must be received on or before 90 days after publication in the Federal Register. Press Release. Proposed Rule.
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