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On August 7, the United Kingdom’s Financial Conduct Authority (FCA) announced the creation of the Global Financial Innovation Network (GFIN) in collaboration with 11 global financial regulators, including the CFPB. As set forth in the GFIN Consultation Document, the three major functions of the initiative are: (i) information sharing among regulators on topics including emerging technologies and business models; (ii) providing a forum for joint policy work; and (iii) instituting “cross-border trials” to create a testing environment for companies as they deal with global regulatory challenges. GFIN’s intention is to serve as an efficient way for innovative fintech firms to interact with regulators and promote transparency, and plans to explore the concept of a “global sandbox” to create opportunities for these firms to test new financial services and products such as artificial intelligence, distributed ledger technology, and initial coin offerings in multiple jurisdictions.
In a press release issued the same day, the Bureau noted that the decision to join the group is a demonstration of its “commitment to promoting innovation by coordinating with state, federal and international regulators.” Acting Director Mick Mulvaney further commented, “We look forward to working closely with other regulatory authorities—whether in the United States or abroad—to facilitate innovation and promote regulatory best practices in consumer financial services.”
The working group seeks multi-jurisdictional comments on the Consultation Document to assess feedback on its proposed mission, function, and priorities. U.S. persons can submit comments through the Bureau’s Office of Innovation or through the FCA and other regulators. Comments must be received by October 14.
On April 22, the Financial Conduct Authority (FCA) fined a subsidiary of U.S.-based bank approximately £13 million ($19.8 million) for (i) improperly reporting more than 35 million various client transactions, ranging from the identity of counterparties to the trading times of such transactions; and (ii) failing to report an additional 121,000 transactions over a seven-year period. According to the final notice issued by the FCA, many of the reporting issues were self-reported to the British regulator.
On October 30, five federal agencies - the FCA, FDIC, NCUA, OCC and the Fed - issued a proposed rule regarding flood insurance. The proposed rule will amend regulations relating to loans secured by property located in special flood hazard areas. Specifically, the proposed rule would (i) establish requirements in connection with the escrow of flood insurance payments; (ii) provide certain borrowers with the option to escrow flood insurance premiums and fees; and (iii) eliminate the HFIAA requirement “to purchase flood insurance for a structure that is part of a residential property located in a special flood hazard area if that structure is detached from the primary residential structure and does not also serve as a residence.” Comments on the proposed rule are due by December 29, 2014.
On September 12, in advance of expected legislation that will restructure the United Kingdom's financial services regulatory framework, the Financial Services Authority (FSA) published the first in a series of Consultation Papers meant to support implementation of the reforms. The Parliament is expected to finalize later this year the Financial Services Bill that will abolish the FSA, create the Financial Conduct Authority (FCA) to regulate financial service provider conduct in retail and wholesale markets, and shift safety and soundness regulation to the new Prudential Regulation Authority (PRA), among other changes. The first Consultation Paper outlines changes to split the existing FSA handbook into new rulebooks for the FCA and PRA. All regulated firms are encouraged to review the Consultation Paper, and the FSA has asked for comments to be submitted by December 12, 2012.