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 Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.