On August 7, the CFPB announced that it was working in collaboration with 11 financial regulators and related organizations on an initiative to create the Global Financial Innovation Network (GFIN). The GFIN builds on the concept of a “global regulatory sandbox” proposed by the United Kingdom Financial Conduct Authority in February 2018 and will seek to provide a more efficient way for innovative firms to interact with regulators, helping them navigate between countries as they look to scale new ideas, and will also create a new framework for cooperation between financial services regulators on innovation-related topics. The collaborative effort is organized around a draft Consultation Document, which sets out the three main proposed functions of the GFIN:
- act as a network of regulators to collaborate and share experiences of innovation in respective markets, including emerging technologies and business models;
- provide a forum for joint policy work and discussions; and
- provide firms with an environment in which to trial cross-border solutions.
The CFPB and the other regulators are seeking views on the mission statement for the GFIN, its proposed functions, and where it should prioritize activity. In the United States, interested parties can provide feedback to the CFPB’s new Office of Innovation by October 14, 2018.
The OCC has announced that it will accept applications from Fintech companies seeking to charter a national bank. In a separate action, the U.S. Treasury Department released a report in which it endorsed regulatory sandboxes and made other recommendations intended to promote Fintech. For more information, read the client alert issued by Goodwin’s Fintech practice.
Enforcement & Litigation
On July 16, in Collins et al. v. Federal Housing Finance Agency et al. (No. 17-20364), a Fifth Circuit panel ruled that the single-director structure of the Federal Housing Finance Agency (FHFA) is unconstitutional. The ruling comes on the heels of the Southern District of New York’s CFPB v. RD Legal Funding LLC decision (2018 WL 3094916 (S.D.N.Y. June 21, 2018)), in which the court reached a similar result with respect to the CFPB, determining that its single-director structure was unconstitutional. In reaching its decision, the Collins court examined the FHFA’s composition, and balanced Congress’s intent to create an independent agency against the constraints the structure imposed upon the president’s Article II powers. View the LenderLaw Watch blog post.
The Mortgage Bankers Association brings together inside and outside counsel, compliance officers, company executives, government relations professionals, policy directors, and quality assurance professionals to discuss current topics impacting the mortgage industry’s regulatory environment for this three-day conference. Goodwin is a sponsor and Tony Alexis, partner in Goodwin’s Financial Industry practice and head of the Consumer Financial Services Enforcement practice, will be speaking on the “Applied Compliance: Trends in RESPA Section 8 Compliance” track. Sabrina Rose-Smith, partner in Goodwin’s Financial Industry and Consumer Financial Services Litigation practices, will be speaking on the “Emerging Compliance Risk: Navigating State UDAP Laws” track. For more information, visit the event website.
Goodwin partner Michael Isenman will be a panelist at the Fiduciary Investment Advisors (FIA) 2018 Annual Conference. Mike will be a speaker on the panel “401(k)/403(b) Mock Deposition: How to Protect Against & Prepare for Defined Contribution Litigation.” For more information, visit the event website.
This week’s Roundup contributor(s): George Schneider.