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Report entitled “”Assessing the impact of new non-bank entrants on competition in the consumer finance market, details how fintechs in particular have significantly increased the number of companies competing in the core market of consumer finance. The significant addition of new fintech entrants is contributing to the competitive pressure, the report argues.
While acknowledging the new capabilities offered by fintech start-ups, the Treasury Department also suggests increased risks to consumer protection and market integrity. The report suggests that companies are taking advantage of loopholes in the regulatory system to avoid having to comply with adverse regulations.
The Treasury Department also cited data privacy risks, concluding that greater oversight of consumer financial activity is needed. It said it needed to scrutinize “non-banking companies” more closely to protect its customers. The solution also aims to enable more sustainable competition.
Janet Yellenthe U.S. Treasury Secretary commented:
The entry of non-bank companies into the core consumer finance market has encouraged competition and innovation, but has not created additional risks to consumer protection and market integrity.
This report demonstrates actions to maintain fair, transparent and competitive markets while promoting responsible innovation that benefits consumers. It can foster competition and innovation while enhancing protection and protection.
report later of President Biden Executive Order of July 2021Promoting competition in the American economy
In a move to protect the economic well-being of consumers, the Treasury Department recommends a number of measures. These steps include:
To preserve market integrity, the Treasury Department proposes that regulators provide a clear and consistently applied supervisory framework for the relationship between banks and fintechs. Fintech relationships with banks that provide consumer financial services provided by an insured depository (IDI) must operate in compliance with the laws, regulations, and risk management standards applicable to the IDI.
The report also suggests that regulators are stepping up their oversight of banks and fintech lending relationships. Regulators must ensure compliance with consumer protection laws.
Consumer safety is our top priority throughout the report, but our focus remains on enabling innovation. The Treasury Department recommends that regulators support innovation in consumer credit underwriting. Innovations aimed at increasing credit visibility, reducing bias, and extending credit to underserved consumers should not be stifled.
