American Banker: Less is more for OCC’s fintech financial inclusion plans

American Banker, August 3, 2018: Less is more for OCC’s fintech financial inclusion plans

The Office of the Comptroller of the Currency is threading a tricky needle.

It has affirmed that it plans to evaluate fintech charter applicants based on their fair lending efforts, but it’s pulled back on specifics for how that process might work. That has made some consumer groups nervous.

The OCC published an updated version of its licensing manual supplement for fintechs on July 31, in connection with an announcement that it’s begun accepting applications for fintech charters. It’s a major step forward for an agency that’s been grappling with its role in overseeing the burgeoning fintech industry for years.

Comptroller of the Currency Joseph Otting

The OCC, headed by Comptroller Joseph Otting, said it would begin accepting fintech charter applications on July 31.

Bloomberg News

Yet the updated guidelines appear to remove key details regarding how the agency will address a fintech’s financial inclusion efforts, when compared to an earlier draft manual published last March under former Comptroller Thomas Curry.

“The biggest concern for us is the unequivocal weakening of the accountability for these special-purpose national banks when it comes to financial inclusion,” said Scott Astrada, director of federal advocacy at the Center for Responsible Lending.

For its part, the OCC says that it modified its manual language from the earlier draft based on continued work and feedback received on the matter, according to agency officials interviewed by American Banker.

Steve Lybarger, deputy comptroller for licensing, emphasized “the seriousness of the agency in its commitment that these applicants have a financial inclusion commitment appropriate to the business plan and activities that they will conduct.”

“In no way, between the original draft and the final supplement, is there any intent of the agency to lessen that commitment going forward,” he said.

That aligns with the agency’s comments in its official policy statement, issued alongside the updated manual: “By providing a high standard similar to the Community Reinvestment Act’s expectations for national banks that take insured deposits, the financial inclusion commitment will help ensure that all national banks provide fair access to financial services and treat customers fairly.”

But for consumer advocates and civil rights groups, the removal of that additional clarity is worrisome because it effectively leaves it up to regulators to determine what counts as inclusion, with little public transparency.

“It appears, at least in terms of accountability, that they’ve softened the touch — and we’re concerned about that,” said Jesse Van Tol, chief executive at the National Community Reinvestment Coalition.

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