Financial Services Weekly News - November 2016 #2



Editor's Note

FinTech at the Forefront.  FinTech remains at the forefront of Washington’s discussions about how best to regulate financial products and services. As discussed in more detail below, the SEC announced the agenda and panelists for its November 14 FinTech Forum. In addition, in a speech at the Chatham House ‘City Series’ Conference, Comptroller of the Currency Thomas J. Curry  warned that the OCC would not create “safe spaces” or “sandboxes,” in which companies could pilot new products or services without the risk of penalty for violating laws, such as consumer protection laws. Many have interpreted the Comptroller’s remarks in a manner that casts doubt on whether the OCC’s initiatives to foster innovation, including the establishment of an Office of Innovation and the potential FinTech national bank charter, are intended to do anything more than ensure that nonbank FinTech firms are regulated in the same manner as their bank counterparts. However, in his speech, Comptroller Curry openly encouraged companies and banks to work with the OCC’s innovation staff in developing pilot programs that meet all established safety and soundness and consumer protection standards. We hope that the Comptroller remains true to his previously stated intention to approach financial innovation with “eyes wide open to the attendant risks, but also an open mind to promising new ideas and new technology.”

Regulatory Developments

Comptroller Curry Discusses Financial Innovation

Approximately one week after the Office of the Comptroller of the Currency (OCC) announced the creation of an Office of Innovation (covered previously in the Roundup), on November 3, Comptroller Curry discussed the OCC’s efforts to develop a framework for improving the OCC’s ability to identify and understand trends and innovations in the financial services industry and evolving consumer expectations. In doing so, Comptroller Currency quashed rumors of the potential creation of “safe spaces” or “sandboxes,” in which companies could pilot new products or services without the risk of penalty for violating laws, such as consumer protection laws. “I do not support this approach,” he said. “Waiving compliance with consumer protection or safety and soundness never makes sense, nor does our agency have the authority to waive compliance requirements. It is the company’s responsibility to ensure products and processes are safe before rolling them out” (emphasis original). Instead, Comptroller Curry encouraged companies to engage in “an open dialogue” with regulators toward the goal of designing responsible product tests. Additionally, Comptroller Curry stated that the OCC is still considering whether to grant national charters to FinTech companies and what conditions would be necessary to ensure that FinTech companies meet the same standards of safety, soundness and fairness as are applicable to other federally chartered institutions.

SEC Announces Agenda, Panelists for Nov. 14 FinTech Forum

On November 3, the Securities and Exchange Commission (SEC) announced the agenda and panelists for its November 14 forum to discuss FinTech innovation in the financial services industry. The FinTech Forum, announced in September and reported in the October 5 edition of the Roundup, will be divided into four panels. Participants on the first panel will discuss the impact of recent innovation in investment advisory services. The second panel will discuss the impact of recent innovation on trading, settlements and clearance activities. Participants on the third panel will discuss the impact of recent innovation in capital formation. The final panel will discuss investor protection in the FinTech era. For members of the public interested in the FinTech Forum, but unable to attend in-person, a live webcast will be available through the SEC’s FinTech Spotlight page.  

OCC to Launch Central Application Tracking System

On November 3, the OCC announced that it will roll out a new Central Application Tracking System (CATS) to allow the banks it regulates to draft, submit and track licensing and public welfare investment applications on January 17, 2017. Available through BankNet, CATS will replace existing e-Corp and CD1 Invest application tools. The OCC will roll CATS out in three phases to facilitate the transition. Phase one, for frequent e-Corp and CD-1 Invest filers, will launch January 17, 2017. Phase two, for all other filers on the existing systems, will come in spring 2017. Phase three, for all other banks, will begin in late spring. While the OCC encourages the filing of applications through CATS, banks may continue to submit paper filings.

Enforcement & Litigation

NY AG Secures $1.6 Million Settlement For Alleged Mortgage Relief Scheme

On November 2, the New York Attorney General (AG) announced a $1.6 million settlement with a debt settlement company and its principal, resolving allegations that the company violated New York’s deceptive and unlawful practices law by engaging in fraudulent, deceptive and illegal business practices in connection with loan modification and audit services. View the full Enforcement Watch blog post.

CFPB And NY AG File Joint Lawsuit Against Debt Collectors

On November 2, the Consumer Financial Protection Bureau (CFPB) and New York Attorney General (AG) announced the filing of a complaint in the United States District Court for the Western District of New York against participants in a purported New York-based nationwide debt collection scheme. View the full Enforcement Watch blog post.

Court Orders Debt Collectors To Pay $11 Million To FTC

On October 31, the United States District Court for the Western District of New York granted the Federal Trade Commission’s (FTC) motion for summary judgment against a group of debt collectors, finding that the debt collectors violated the Federal Trade Commission Act (FTCA) and Fair Debt Collection Practices Act (FDCPA). View the full Enforcement Watch blog post.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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