FinTech Developments: OCC Adopts Innovation Framework Recommendations

The Office of the Comptroller of the Currency ("OCC") has adopted recommendations developed by its Innovation Framework Development Team that address measures for the OCC to take to encourage the development of FinTech products and services. This initiative by the OCC will affect banks as well as other providers of financial services such as credit unions, consumer finance companies and mortgage lenders.

This action by the OCC follows closely on the heels of the introduction of the "Financial Services Innovation Act of 2016" ("FSIA") by Representative Patrick McHenry, which is intended to encourage the development of financial products and services by FinTech innovators and mandates that each federal banking agency establish a Financial Services Innovation Office. The OCC's guidance is also intended to address some of the concerns raised by commenters to the OCCs' white paper, published in March 2016, which established eight principles for developing a framework for evaluation of FinTech products and services. These include supporting responsible innovation, encouraging responsible innovation that provides fair access to financial services and fair treatment of consumers and collaborating with other regulators.

Innovation Framework Development Team Recommendations

Office of Innovation

An Office of Innovation (the "Office") will be established to serve as a central point of contact and facilitate responses to inquiries and requests for interpretation of regulations by financial institutions and FinTech companies. It will also conduct outreach and provide technical assistance and collaborate with domestic and international regulators. The Office will report directly to the Comptroller. The Office will consist of a Chief Innovation Officer, an Innovation Technician and other Innovation Officers and Innovation Fellows. The use of Innovation Fellows is intended to enable the Office to leverage the experience and knowledge of academics, consumer and community activists and the private sector and share and transfer OCC knowledge on regulation and supervision to the Fellows. A Responsible Innovation Committee consisting of Deputy Comptrollers and Directors of OCC business units will be established to advise the Office and promote collaboration across agency business units.

Outreach and Technical Assistance Program

A robust program will be established for outreach and technical assistance related to innovation. The OCC recognized that while the...