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The U.S. Treasury Department, in collaboration with the White House Competition Council, has released a report outlining recommendations for mitigating the risks fintech poses to consumer protection and market integrity.
US Treasury recommends increased oversight of fintech consumer finance
The report details how new non-banking firms, especially fintech firms, are “significantly” increasing the number of competitors in the core market of consumer finance.
To enhance consumer protection, the report notes the need to “increase” scrutiny of these new companies with respect to consumer financial activities, including risks associated with data privacy and regulatory arbitrage. Recommended.
The report notes the need for regulators to provide a clear and consistently applied supervisory framework for bank-fintech relationships, and that bank-fintech relationships It recommends that it must operate in compliance with the laws, regulations and risk management standards applicable to the institution.
Regulators will also tightly supervise banks and fintech lending relationships to comply with consumer protection laws, increasing credit visibility, reducing bias, and protecting underserved consumers. We need to support innovation in consumer credit underwriting that is carefully designed to expand credit.
U.S. Treasury Secretary Janet Yellen says Fintech’s entry into the consumer finance market has increased competition and innovation, but “couldn’t have happened without additional risks to consumer protection and market integrity.” says.
Yellen adds: This report shows actions to maintain fair, transparent and competitive markets while promoting responsible innovation that benefits consumers.
The report is the result of President Joe Biden’s July 2021 executive order, “Promoting Competition in the American Economy,” and is part of a series of reports assessing competition in various aspects of the economy.
