Banking groups ask CFPB to subject fintechs to the same level of lending oversight as banks
The Consumer Bankers Association (CBA) and the Center for Responsible Lending (CRL) are urging the Consumer Financial Protection Bureau (CFPB) to develop a rule that subjects non-custodial and non-bank lenders to the same level of CFPB oversight as large banks and credit unions are.
Currently, fintechs and other non-bank lenders are not subject to regular oversight by the CFPB. ABC and CRL officials say this has created a level playing field and risk for consumers.
“CBA has long called on policymakers to bring a regulatory level playing field to the rapidly changing banking landscape, including in the consumer lending market where fintechs now issue nearly half of all personal loans, compared to only 22% in 2015. While fintechs continue to grow and offer more and more traditional financial products, they are not subject to the same federal oversight that banks have respected for more than a decade. By using one of its most effective tools to facilitate competitive markets for consumer financial products and services – the largest participant rule – the Bureau can help ensure that every American receives the protections they deserve, no matter be where he goes to meet his financial needs,” Lindsey Johnson, president and CEO of the ABC, said.
The petition filed jointly by the groups calls for a market-defining CFPB rule to cover both closed installment loans and open lines of credit. It also recommends a rule covering both the issuance and servicing of personal loans.
“There are large non-bank lenders, even some publicly traded companies, routinely peddling questionable credit products without meaningful government oversight on behalf of the consumer. There are many red flags, including loans given to consumers without checking their ability to repay, exorbitant default rates, and interest rates of up to 100% APR and well beyond. It’s time to watch the CFPB,” said CRL President Mike Calhoun.