Amid ongoing rumblings of a ramp-up in regulatory oversight of fintechs by the federal government, the Consumer Financial Protection Bureau (CFPB) has arisen as a key figure in how finance is to be supervised in the era of digital transformation. Earlier this year, the CFPB announced major expansions of how it would classify neobanks and other fintechs as subject to its same regulatory policies for credit-issuing organizations, whether or not credit is involved.
While stricter federal scrutiny of fintechs has been decried by many in the industry, there are those within fintech that welcome the increased enforcement efforts. After all, the finance industry has changed dramatically within the last decade, and with so many new technologies and services around, increased regulation may help boost consumer confidence in, and therefore their use of, fintech. To voice their support for increased oversight, the Consumer Bankers Association and the Center for Responsible Lending recently petitioned the CFPB to scrutinize BNPL companies more closely moving forward.
“Increased examinations will provide more opportunities for investigations and public enforcement actions against fintech companies,” said Carolyn Frantz and Melissa Baal Guidorizzi of Orrick, Herrington & Sutcliffe in an article for Bloomberg Law. “This is exactly the kind of activity that financial services stakeholders want to see.”