In a speech delivered yesterday to an industry conference in London, Comptroller of the Currency Thomas Curry did not reject the idea of a special charter for fintech firms – but did reject the idea that such a charter would come with lessened regulatory burdens as compared to a traditional bank charter.
In particular, Comptroller Curry emphasized that, should his office decide to grant a charter to fintech firms that do not wish to become (or do not qualify to be) national banks or federal savings associations: “the institution will be held to the same high standards of safety, soundness, and fairness that other federally chartered institutions must meet.”
Moreover, commenting on the U.K. Financial Conduct Authority’s “regulatory sandbox” (pitched as “a ‘safe space’ in which businesses can test innovative products, services, business models and delivery mechanisms in a live environment without immediately incurring all the normal regulatory consequences”), Comptroller Curry noted:
I do not support this approach. Waiving compliance with consumer protection or safety and soundness never makes sense, nor does our agency have the authority to waive compliance requirements. It is the company’s responsibility to ensure products and processes are safe before rolling them out. But, companies can conduct carefully designed pilots responsibly and limit their liability by controlling scope and duration and ensuring their tests are closely monitored throughout.
Comptroller Curry’s rejection of the “sandbox” approach is consistent with the OCC’s October 26 white paper announcing, among other things, that the OCC would seek to develop a “pilot framework” to allow banks “to test innovative products, services, and processes.” That white paper made clear that OCC stakeholders believed such a program, which would be open only to chartered national banks and federal savings associations, should “not provide a safe harbor from consumer protection requirements.”
But while Comptroller Curry’s views are in alignment with those of his internal stakeholders, they place the U.S. out of alignment with other major financial jurisdictions. Hong Kong and Singapore have both adopted variations on the U.K.’s sandbox approach. And, just a day before Comptroller Curry’s speech, Switzerland’s Federal Council (essentially, Switzerland’s cabinet) instructed that country’s Federal Department of Finance to prepare a consultation draft of measures that would “eas[e] . . . the regulatory framework for providers of innovative financial technologies.” The gap between U.S. and foreign regulators may increase calls for a possible legislative fix.