Weekly Fintech Focus

  • NYDFS creates a consumer protection task force to bolster its consumer protection activities.
  • CFPB issues its second no-action letter under its revised no-action letter policy. Both no-action letters relate to HUD’s housing counseling program.
  • CSBS releases Accountability Report on Fintech Developments.
  • Visa to acquire Plaid for $5.3 billion.
  • CFPB and the Utah AG to host joint office hours on 1/30 in Salt Lake City

NYDFS Creates Consumer Protection Task Force

New York Department of Financial Services (NYDFS) Superintendent Linda A. Lacewell announced the creation of a consumer protection task force (the “Task Force”) to “further DFS’s mission to protect consumers as the federal government rolls back important consumer protections.”  The Task Force will be the NYDFS’s third standing advisory board.  Superintendent Lacewell named 12 members of the Task Force from numerous consumer groups.  Superintendent Lacewell hopes to use the members’ experience to “implement the expansive consumer protection agenda outlined in the Governor’s 2020 State of the State agenda, and further solidify New York’s reputation as the consumer protection capital of America.”

CFPB Issues No-Action Letter to Bank Offering Housing Counseling Financing

The Consumer Financial Protection Bureau (CFPB) issued a no-action letter (NAL) to Bank of America to offer funding arrangements with housing counseling agencies that participate in the Department of Housing and Urban Development (HUD).  This is the second NAL issued by the CFPB under its revised NAL Policy.  The first NAL issued under the revised NAL Policy covered housing counseling agencies that participated in the HUD housing counseling program, so this latest NAL relates to that prior action.

The NAL states the CFPB will not take supervisory or enforcement action against the bank under Section 8 of the Real Estate Settlement Procedures Act (RESPA) or its authority to prevent unfair, deceptive, or abusive acts or practices (UDAAP).  Under the proposed program, the bank would enter into funding arrangements with housing counseling agencies to purchase counseling services on the condition that the consumer applies for a loan with the bank.  The NAL will allow this arrangement even if it would otherwise be a prohibited referral arrangement under RESPA so long as the “level of payment for the housing counseling services does not exceed a level that is commensurate with the services provided and is reasonable and customary for the area.” The bank must keep the CFPB updated about any material changes to its NAL application or material changes to the described aspects of the product or service offered by the bank.

CSBS Releases Report on FinTech Developments

The Conference of State Bank Supervisors (CSBS) released an accountability report that summarized the progress made on several initiatives to standardize and streamline state licensing and supervision of fintech companies.

The report briefly describes developments in five key initiatives and various sub-categories within.  The five initiatives include:

  • Using CSBS Regtech for Licensing and Exams
  • Harmonizing Owner and Management Vetting
  • Increasing Transparency
  • Creating Uniform Definitions and Practices
  • Continuing Industry and Regulator Conversations

Of particular note are the developments pertaining to a 50-state model money services business law, the creation of a central repository of state licensing and fintech guidance and standardizing the consumer finance call reports.

Visa to Acquire Plaid

On January 13, 2020, Visa and Plaid announced that Visa would be acquiring Plaid for $5.3 billion.  That amount is nearly double the prior valuation ($2.65 billion) that Plaid obtained during its latest 2018 funding round.  Visa stated that it will fund the deal by using cash on hand in addition to issuing debt at a later date.

Visa’s CEO, Al Kelly stated that the deal was a long-term play and that it would help expand Visa’s own total addressable market and relationships with fintech companies, as well as boosting Plaid’s growth.  Visa was an early investor in Plaid.

CFPB & UTAH Attorney General to Host Joint Office Hours in Salt Lake City on 1/30

The Consumer Financial Protection Bureau (CFPB) and the Office of the Utah Attorney General announced that they would host joint office hours on January 30, 2020 in Salt Lake City, Utah as part of the American Consumer Financial Innovation Network.

Those interested in requesting a meeting will need to send an email to officeofinnovation@cfpb.gov to schedule an appointment.