Category Archives: Regulatory Oversight

Virginia Study on Internet Lending Concludes

The working group of the Virginia Bureau of Financial Institutions (the “Bureau”), which was established to consider potential legislation for the licensing and supervision of online lenders, held its last meeting on September 14th. The Bureau will now prepare a report, possibly with proposed legislation, to submit to the Virginia General Assembly for its consideration in the 2018 session. At the September 14th meeting, it was established that there is consensus (no opposition) among the working group members to recommending legislation to amend Virginia’s consumer finance company statutes to require the licensing of online lenders and to subject such lenders …

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Virginia Study Group Considers Licensing and Supervision of Internet Lenders at Second Meeting

The working group of the Virginia Bureau of Financial Institutions (the “Bureau”), which was established at the direction of the Virginia General Assembly to consider potential legislation to regulate internet lending, held its second meeting on July 15th. The focus of the group is primarily on online closed-end and open-end loans made by non-depository lenders, particularly out-of-state lenders.  Such lenders are not subject to the licensing and other requirements under Virginia’s current consumer finance statutes. At the outset of the meeting, representatives from both the Bureau and the Virginia Attorney General’s office expressed their view that all non-depository lenders making …

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Virginia General Assembly to Consider Legislation Impacting Online Lending in 2017 Session

Legislation affecting online lending will be among the bills the 2017 Virginia General Assembly considers when it convenes on January 11th for its regular session. Delegate Peter Farrell has prefiled two bills that would impose new licensing requirements and fee limitations on such loans. Similar bills are expected to be introduced by other members of the General Assembly. These measures have the support of the Virginia Bureau of Financial Institutions (the “Bureau”), the Virginia Attorney General’s office, and Legal Aid organizations, among others. With respect to Delegate Farrell’s bills, HB 1443 would subject any lender making consumer loans over the …

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National Bank Charter Will Be Available to Fintech Companies in the New Year

Financial technology companies will soon have a new business model to consider – one that will allow them to avoid the various licensing and other regulatory requirements in the states where they do business. The Office of Comptroller of the Currency (“OCC”), the federal banking agency responsible for the supervision of national banks, announced on December 2nd that it will start granting limited or special purpose national bank charters to fintech companies. There are, however, strings attached. A fintech company electing such a charter will be subject to many of the same rigorous safety and soundness standards that currently apply …

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CFPB Proposes Ban on Class Action Waiver Provisions in Arbitration Agreements

On May 5, 2016, the Consumer Financial Protection Bureau (CFPB) announced proposed regulations that would prohibit financial service providers from using arbitration clauses that prevent consumers from bringing class action lawsuits. Under the CFPB’s proposal, companies would still be able to include arbitration clauses in their contracts, but the clauses would be required to expressly state that they cannot be used to prevent consumers from being part of a class action lawsuit. In addition to the ban on class action waivers in consumer arbitration agreements, the proposed regulations would require companies that arbitrate disputes with consumers to submit information regarding …

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OCC Signals Support for FinTech Innovations

The federal banking agency that supervises national banks and federal savings associations – the Office of the Comptroller of the Currency (“OCC”) – has formally taken up financial technology (“FinTech”) as an important regulatory issue. In a white paper released on March 30th, the OCC outlines principles that the OCC will follow in its approach to regulating FinTech. The white paper reflects the OCC’s desire to work with banks and FinTech firms to foster the responsible development of FinTech innovations. The white paper seeks public comment on issues raised in the paper by May 31st.

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The Perils of Success: Recent Regulatory Focus Heightens Potential For Future Risk

Two recent regulatory actions – one by the Consumer Financial Protection Bureau, the other by the California Department of Business Oversight – highlight the increased scrutiny facing marketplace lenders from a consumer protection perspective. Companies involved in the marketplace lending industry will likely face additional regulatory inquiries and heightened scrutiny throughout the remainder of 2016, as the industry’s relationship with government regulators on all levels continues to evolve. As marketplace lenders continue to generate greater interest from both consumers and traditional financial services companies, so too will these lenders face rising regulatory risks. CFPB Inquiry Earlier this month, the CFPB …

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