Office of the Comptroller of the CurrencyThe US Office of the Comptroller of the Currency (OCC) is moving forward with its plan to enable fintech companies to become special purpose national banks, releasing a report that provides guidance on how to implement the plan and another that summarises public comments about it. The special charter has no shortage of critics, but perhaps the most vocal – New York State – has turned up the dial on its opposition.

Paybefore (Banking Technology‘s sister publication) reports that the OCC on 2 December 2016, released a proposal for awarding charters to fintech firms if they fulfill multiple requirements, including performing core banking services. The idea is to promote financial inclusion and regulatory consistency, and to strengthen the federal banking system, among other goals, the OCC said.

On 15 March, the agency released a draft supplement to its existing licensing manual that “explains how the OCC will apply the licensing standards and requirements in existing regulations and policies to fintech companies applying for special purpose national bank charters”.

The 24-page supplement also discusses how the agency will supervise fintech firms that become banks. Comments on the supplement are due 14 April and may be submitted to

Along with that, the OCC released a summary of the comments it has received about the fintech charter proposal. Among the main comments praising the proposal were:

  • A national charter would provide fintech companies with uniform, clear and consistent supervision and regulation.
  • Having a national bank charter would eliminate the need for state-by-state licenses, thereby reducing regulatory burdens and costs and facilitating growth.

Among the main concerns were:

  • The potential for consumer harm, given that a fintech company chartered as special purpose national bank could avoid consumer protections granted by state laws or federal laws that only apply to deposit-taking banks.
  • The OCC has not limited SPNB charters to fintech companies, and thus the charters could be used by payday lenders.

State regulators, Democratic US senators and community bankers have criticised the proposal for a new fintech charter. New York State Department of Financial Services Superintendent (NYDFS) Maria Vullo in January questioned why the OCC wanted to charter fintech firms given that the agency had not identified any deficiencies at the state level to justify those charters.

On 15 March Vullo spoke out against the plan again. The “imposition of an entirely new federal regulatory scheme” upon existing state oversight “will invite efforts to evade state usury laws and other consumer protections, stifle small business innovation, create institutions that are too big to fail, and increase the risks presented by non-bank entities”.

The NYDFS also challenged the OCC claim that it can set up the fintech charters without congressional authorisation under the National Bank Act.

That’s not the only challenge the OCC proposal faces. In a letter dated 10 March, all 34 Republican members of the Financial Services Committee of the US House of Representatives asked the OCC to avoid rushing its charter decision so that the industry has time to better digest the plan.