United States: FinTech Developments: Financial Services Innovation Bill Introduced

In September 2016, Representative Patrick McHenry (R-NC) introduced H.R. 6118, the "Financial Services Innovation Act of 2016" ("FSIA"). FSIA is intended to encourage the development of financial products and services by FinTech innovators, including financial institutions, technology companies and entrepreneurs. FSIA mandates the creation of a Financial Services Innovation Office (a "FSIO") within each federal banking agency as well as a number of other federal agencies having jurisdiction over types of financial services, including the CFPB, the CFTC, the FTC, the SEC, HUD and the Treasury Department ("Covered Agencies").

FinTech has existed for years in the form of home banking, mobile payment systems, ATMs and other familiar products and services. It has attracted greater interest in recent years due to the development of more sophisticated technology and entrepreneurs in the financial services arena. Many of the laws and regulations that currently govern the delivery of financial services and products were implemented pre-FinTech and the coordination of these laws with FinTech products and services will require flexibility on the part of both regulators and the banking industry. Many commentators in the industry are supporting the concept of the OCC authorizing the chartering of national banks to focus on providing FinTech services while perhaps forgoing making loans or accepting deposits.

Within the past year FinTech has received considerable attention of the financial services industry and the banking regulators. The Office of the Comptroller of the Currency (the "OCC"), the regulator of national banks and federal savings banks, has addressed FinTech at various conferences within the past year, issued a whitepaper on this topic in March 2016 and hosted a one day forum in June 2016 entitled "Supporting Responsible Innovation in the Federal Banking System." In the whitepaper the OCC requested comment on a number of areas, including how can the OCC facilitate responsible innovation and enhance its process for monitoring and assessing innovation within the federal banking system. The OCC established eight basic principles in guiding its development of a framework for evaluating FinTech products and services by its regulated institutions. These principles call for the OCC to (1) support responsible innovation, (2) foster an internal culture receptive to responsible innovation, (3) leverage agency experience and expertise, (4) encourage responsible innovation that provides fair access to financial services and fair treatment of consumers, (5) promote safe and sound operation through effect risk management, (6) encourage all banks to integrate responsible innovation into their strategic planning, (7) promote dialog through formal outreach and (8) collaborate with other regulators.

Establishment of FSIO

Each Covered Agency must establish a FSIO to promote "financial innovation" and to assist a petitioner whose request for regulatory relief has been granted. Each agency, acting through its FSIO, must (1) support the development of financial innovations, (2) coordinate the sharing of information with the FSIOs of other agencies and (3) establish procedures to reduce the time and cost of offering a financial innovation to the public and enable greater access to financial innovations. Financial innovation is defined as any innovative financial product or service, the delivery of which is enabled by technology.

FSIA imposes an affirmative obligation upon the Covered Agencies, which respect to a petitioner whose request has been granted, to (1) assist the petitioner to address issues of how existing regulations apply to the innovation, (2) assist the petitioner in complying with the requirements of the federal regulators of the financial innovation and (3) assist the petitioner in responding to any challenges to a modification or waiver from the application of a federal statute or regulation that was granted.

The agency may also modify or waive the application of a federal statute under which the agency has rulemaking authority if it determines the regulation is burdensome to the petitioner. No guidance has been provided as to what is considered "burdensome."

Identification of Applicable Regulatory Areas

Within 60 days of the enactment of FSIA and bi-annually thereafter, each agency must publish in the Federal Register three or more areas of existing regulations under its oversight (1) that apply or might apply to financial innovation and (2) that the agency might consider modifying or waiving if the agency were to receive a petition for an alternative compliance strategy for addressing compliance with the particular regulation.

Petition for Regulatory Relief

Any person who offers or intends to offer a financial innovation product or service may petition the affected agency's FSIO to enter into an enforceable compliance agreement that would contain a modification or waiver of a federal agency regulation or a federal statute under which the agency has supervisory or rulemaking authority. Another federal agency or state agency may not commence an enforcement action with respect to a financial innovation that is subject to such an agreement.

The petition must contain an alternative compliance strategy to comply with the regulations or statute and demonstrate that under the alternative strategy the financial innovation (1) would serve the public interest, (2) improves access to financial products or services, (3) does not present systemic risk to the United States financial system and (4) promotes consumer protection. During the agency's consideration of the petition it may not take an enforcement action against the petitioner relating to the financial innovation that was subject to the petition. If the financial innovation presents an immediate danger to consumers or systemic risk to the United States the agency may seek injunctive relief to prevent the person from offering such financial innovation.

Not later than 30 days after receiving a petition, the Covered Agency must publish the petition in the Federal Register and provide a 60 day public comment period. The notice and comment period may be waived if the agency determines the petition is similar to one that has been previously granted. The agency must maintain the confidentiality of any non- public information contained in the petition. The agency must make its determination within 30 days after the end of the comment period, or if waived, within 60 days after receipt of the petition. In the event a petition is rejected, the person may resubmit the petition.

FSIO Liaison Committee

FSIA requires the creation of a FSIO Liaison Committee to coordinate, among other things, the sharing of information regarding petitions that the Covered Agencies might receive and to monitor proposals and developments related to financial innovation. The committee is required to meet twice a year as well as to hold four public field hearings each year and gather information from the public as well as to provide information and advice to the public.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions