The Consumer Financial Protection Bureau (CFPB) this week announced a new partnership with a group of state-level regulating authorities to launch the American Consumer Financial Innovation Network (ACFIN), a network that is designed to “enhance coordination among federal and state regulators to facilitate financial innovation,” according to an announcement released by the CFPB.
While sending initial invitations out to all state regulators to join the new project, the initial roster is made up of Attorneys General of seven different states: Alabama, Arizona, Georgia, Indiana, South Carolina, Tennessee, and Utah. The aim of the new organization is to “promote regulatory certainty for innovators,” which the Bureau contends will benefit both the larger U.S. economy and consumers specifically.
“Federal and state coordination promotes consistency in the regulation of consumer financial products and services while facilitating consumer-beneficial innovation,” said Consumer Financial Protection Bureau Director Kathleen L. Kraninger in the announcement. “ACFIN will provide a platform for Federal and State regulators to coordinate with each other as they develop new rules of the road and apply existing ones. This coordination can provide greater regulatory certainty across jurisdictions and allow regulators to keep pace with market developments.”
The Director will continue to encourage other state regulators to join the initiative to further streamline the relations between federal and state financial regulatory bodies, she adds.
The announcement of ACFIN was praised by American Bankers Association President Rob Nichols in a press release.
“ABA appreciates the steps the Bureau has taken today to promote responsible innovation,” Nichols said. “Regulatory uncertainty can hinder the development of innovative products and services that benefit consumers and expand access to the financial system. […] We also welcome the Bureau’s effort to increase information sharing and coordination with state regulators through the establishment of the American Consumer Financial Innovation Network. This collaboration will further reduce regulatory uncertainty, promote innovation and increase competition that benefits consumers.”
The American financial system and the entities that operate within it are often charged with answering to the sometimes divergent requirements of both state and federal regulatory authorities. In mid-2018, the U.S. Department of the Treasury released a series of proposals encouraging the government to create a streamlined, national framework to regulate the burgeoning financial technology sector.
The recommendations were detailed in a Treasury Department report to President Trump titled “A Financial System That Creates Economic Opportunities: Nonbank Financials, Fintech, and Innovation.” In it, the department encouraged a unification of regulatory regimes governing the behavior of these institutions.
“Treasury recommends that if states are unable to achieve meaningful harmonization across their licensing and supervisory regimes within three years, Congress should act to encourage greater uniformity in rules governing lending and money transmission to be adopted, supervised, and enforced by state regulators,” the 2018 report reads.
Read the charter of ACFIN at the CFPB.