The Department of the Treasury has released a new report on the impact of new entrant non-bank firms on competition in consumer finance markets and provided recommendations on how to address risks associated with the emergence of new financial technology companies.
In the report, Treasury found that fintech firms are creating new risks to market integrity and recommended that regulators develop “a clear and consistently applied supervisory framework” to oversee relationships between banks and fintech companies.
The report also recommended that a bank-fintech relationship that offers consumer financial services provided by an insured depository institution comply with the regulatory requirements applicable to the IDI.
Treasury also noted that fintech firms are presenting risks to consumer protection and data privacy and suggested that regulators provide robust supervision of bank-fintech lending relationships.
Janet Yellen, secretary of the Treasury, said that the entrance of non-bank companies has boosted competition and innovation in the consumer finance markets but it does not “come without additional risks to consumer protection and market integrity.”
“This report lays out actions that would maintain fair, transparent, and competitive markets while encouraging responsible innovation that benefits consumers,” Yellen continued.