Numerous recommendations related to improving interagency coordination on fintech – including addressing competing concerns on financial account aggregation, and evaluating whether it would be feasible and beneficial to adopt regulatory approaches similar to those undertaken by regulators in jurisdictions outside of the United States – are made in a new report issued by the congressional oversight agency Thursday.
In the report issued by the Government Accountability Office (GAO) on “fintech” (or financial technology companies – those providing financial services through means of new or advanced technology), the oversight agency noted that the current U.S. financial regulatory structure poses challenges to fintech firms, based on interviews with principals in the firms.
“With numerous regulators, fintech firms noted that identifying the applicable laws and how their activities will be regulated can be difficult,” GAO stated in its report, Financial Technology: Additional Steps by Regulators Could Better Protect Consumers and Aid Regulatory Oversight.
“Although regulators have issued some guidance, fintech payment and lending firms say complying with fragmented state requirements is costly and time-consuming,” GAO reported. “Regulators are collaborating in various ways, including engaging in discussions on financial protections for customers that may experience harm when their accounts are aggregated by a fintech firm and unauthorized transactions occur. Market participants disagree over reimbursement for such consumers, and key regulators are reluctant to act prematurely.”
The congressional watchdog stated that regulators could act collaboratively to better ensure that consumers avoid financial harm and continue to benefit from these services, given their mandated consumer protection missions.
As a result, GAO said it has identified leading practices for interagency collaboration, including defining agency roles and responsibilities and defining outcomes. “Implementing these practices could increase the effectiveness of regulators’ efforts to help resolve this conflict,” GAO stated.