Published September 14, 2017
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The U.S. banking regulator, the Acting Comptroller of the Currency, said that he is not ready to accept applications from financial technology companies seeking a special purpose federal charter.
Keith Noreika, who took over as acting head of the Office of the Comptroller of the Currency (OCC) in May, said at an industry conference in New York that the agency was still in the exploratory phase of its so-called fintech charter, which it first unveiled in 2016 and which sparked controversy.
His comments underscore the broader difficulties faced by regulators globally as they attempt to keep up with dramatic changes in banking industry brought about by the increasing use of digital technologies which threaten to undermine traditional financial services businesses.
“We aren’t yet ready to accept applications because we want to just talk to these companies to get a sense of what your business line is before we entertain applications,” Noreika said in an interview with Reuters prior to the conference.
The OCC is, however, processing applications from fintech companies seeking traditional forms of bank charters, such as licenses that are issued to deposit-taking institutions and credit-card providers. Mobile banking startup Varo Money is one of such companies that has applied for a banking charter.
“We approach this from what we have a specialty with which is what we know the best - we know full service banks the best,” Noreika said.
The OCC has been sued by the New York Department of Financial Services and a nationwide organization of bank supervisors after it announced last year that it was considering granting special charters to companies such as online lenders.
The lawsuit argues that the federal regulator does not have the authority to grant special charters and could lead to weaker consumer protection.
Noreika said the OCC had filed a motion to dismiss the cases because the agency is not “anywhere near deciding whether we’re actually going to use” it and so it believes there is no federal jurisdiction to hear the case.
Re-disseminated by The Asian Banker from Reuters