The Government Accountability Office (GAO) has issued the Consumer Financial Protection Bureau (CFPB) a series of recommendations regarding sharing lender alternative data insight.
The GAO is recommending the CFPB and federal banking regulators communicate in writing to fintech lenders and banks that partner with fintech lenders, respectively, on the appropriate use of alternative data in the underwriting process.
The GAO said the recommendations stem from the CFPB having supervisory authority over some fintech lenders. Fintech lenders that have entered into third-party relationships with banks may also be subject to indirect oversight by federal banking regulators.
The recommendations include that the Director of the Bureau of Consumer Financial Protection should communicate in writing to fintech lenders on the appropriate use of alternative data in the underwriting process while the Chair of the Board of Governors of the Federal Reserve System should communicate in writing to banks that engage in third-party relationships with fintech lenders on the appropriate use of alternative data in the underwriting process.
Additionally, the Chairman of the Federal Deposit Insurance Corporation should communicate in writing to banks that engage in third-party relationships with fintech lenders on the appropriate use of alternative data in the underwriting process, including issues to consider when selecting types of alternative data to use.
Lastly, the Comptroller of the Currency should communicate in writing to banks that engage in third-party relationships with fintech lenders on the appropriate use of alternative data in the underwriting process, including issues to consider when selecting types of alternative data to use.