Fostering interaction between “innovative firms” and regulators internationally in order to “create a new framework for cooperation between financial services regulators on innovation-related topics” is the aim of an effort announced Tuesday by the federal consumer financial protection agency.
The agency also indicated its new “Office of Innovation” will play a key role in the effort.
In a blog post, the Bureau of Consumer Financial Protection (BCFP, formerly known as the CFPB) said it is joining the “Global Financial Innovation Network” (GFIN), an international effort with three main proposed functions:
- to act as a network of regulators to collaborate and share experience of innovation in respective markets, including emerging technologies and business models;
- to provide a forum for joint policy work and discussions; and
- to provide firms with an environment in which to “trial cross-border solutions.”
According to the bureau, other regulatory agencies from around the world have already joined the GFIN, including from the United Kingdom. The BCFP said a February 2018 whitepaper on the idea of a “global sandbox” by the UK’s Financial Conduct Authority (FCA) generated “some 50 responses” in support of the “idea of regulators collaborating on the topic.”
The BCFP said it is seeking views on the mission statement for the GFIN, its proposed functions, and where it should prioritize activity. “The group would also welcome hearing from other interested regulators who wish to get involved,” the agency said.
The BCFP said its effort is organized around a “Consultation Document,” which contains a list of 10 questions open for public response. Responses are due by Oct. 14 to the BCFP’s new Office of Innovation, the agency’s blog post stated. The questions are:
- Do you agree with the proposed mission statement for the GFIN?
- Do you agree with the three main proposed functions for the GFIN?
- What aspects/areas of regulation pose the biggest challenge when it comes to innovating?
- Do you see any reasons why this initiative may be counterproductive to the outcomes it is seeking to achieve?
- Do you believe the issue of developing a best practice for regulators when assessing financial innovation should be a priority for the network? If not, what other priorities should the network first address?
- Do you agree with the approach to involve global standard-setting bodies as part of the GFIN? How else would you like to see these organizations involved?
- What kind of outcomes from the policy work and regulatory trials would your organization benefit from?
- Would the cross-border trials be of interest to your organization? If so, could you provide any potential example use cases?
- Do you agree with the proposed approach to managing the application process for cross-border trials?
- [For regulators] Do you anticipate any challenges with the proposed approach to managing the application process, or conducting cross-border trials?
According to the BCFP blog post, the agency’s Office of Innovation is intended to help the bureau “fulfill its statutory mandate to promote competition, innovation, and consumer access within financial services.” The office will focus on creating policies to facilitate innovation, engaging with entrepreneurs and regulators, and reviewing outdated or unnecessary regulations, the agency said.
Last month, Acting BCFP Director John (“Mick”) Mulvaney named Paul Watkins the director of the office, which assumed the work of the bureau’s former Project Catalyst (launched in 2012 “to encourage consumer-friendly innovation and entrepreneurship in markets for consumer financial products and services”). Watkins had formerly worked for the Arizona Attorney General, where he led that office’s fintech initiatives. According to a BCFP release last month, Watkins managed the FinTech Regulatory Sandbox, “the first state fintech sandbox in the country, which allows a company limited access to the marketplace in exchange for relaxing some regulations.”