Treasury Department report advocates enhanced fintech oversight

A recent report from the U.S. Department of the Treasury is calling for enhanced oversight of the consumer financial activities of non-bank firms, particularly fintech entities.

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The Treasury Department consulted with the White House Competition Council in releasing the analysis entitled “Assessing Impacts of New Entrant Non-bank Firms on Competition in Consumer Finance Markets.”

“Innovation and competition must work hand in hand in a healthy economy,” Secretary of the Treasury Janet L. Yellen said. “While non-bank firms’ entrance into core consumer finance markets has increased competition and innovation, it has 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. With existing authorities, regulators can encourage competition and innovation while further safeguarding and protecting consumers.”

The report issues a series of recommendations encouraging fair and responsible competition, including providing a clear and consistently applied supervisory framework for bank-fintech relationships; regulators robustly supervising bank-fintech lending relationships for compliance with consumer protection laws and their impact on consumers’ financial well-being; and regulators supporting innovations in consumer credit underwriting designed to increase credit visibility, reduce bias and expanding credit to underserved consumers.

The report stems from President Joe Biden’s July 2021 Executive Order, “Promoting Competition in the American Economy.” It serves as the final in a series of reports assessing competition in various aspects of the economy.