In order to "close gaps, prevent abuses, and protect consumers," the FinTech sector needs "additional oversight," according to a recent report released by the US Treasury Department.
According to the research, which was produced in collaboration with the White House Competition Council, FinTech companies are "adding significantly" to the number of business models that are actively competing in the finance markets.
The Treasury stated that although these FinTech companies "are enabling new capabilities, they are also creating new risks to consumer protection and market integrity, such as risks related to data privacy and regulatory arbitrage."
To "protect consumers in these rapidly changing markets," the organization has now urged for "enhanced oversight" of non-bank enterprises' consumer financial activity.
US Treasury Secretary Janet Yellen stated in a statement that "innovation and competition must work hand in hand in a healthy economy… While non-bank firms’ entrance into core consumer finance markets has increased competition and innovation, it has not come without additional risks to consumer protection and market integrity."
"This report lays out actions that would maintain fair, transparent, and competitive markets while encouraging responsible innovation that benefits consumers," she continued. "With existing authorities, regulators can encourage competition and innovation while further safeguarding and protecting consumers."
The report follows President Biden's introduction of the July 2021 Executive Order on "Promoting Competition in the American Economy."
The research advises financial authorities to "robustly supervise" bank-FinTech lending relationships for compliance with consumer protection laws and their impact, as well as to create a "clear and consistently applied supervisory framework for bank-FinTech relationships."
By fLEXI tEAM