The World Council of Credit Unions supports a level playing field that subjects fintech firms to the same requirements as credit unions, it wrote to the Basel Committee on Banking Supervision. The letter was sent in response to a Basel consultative document on the implications of fintech developments.
“Fintech companies should be subject to the same or equivalent regulations as authorized deposit-taking institutions such as banks, credit unions and building societies in order to protect the public, ensure financial stability, and promote a regulatory level playing field,” the letter reads. “While a smaller fintech company could be subject to a lighter rulebook than a large fintech in order to achieve the principle of proportional regulation, community-based depository institutions such as credit unions should also benefit from the regulatory burden relief of such proportional rules.”
Fintech companies are technology companies that typically do not have a depository institution charter but offer financial services within the “business of banking.”
The Basel Committee, the primary global standard setter for the prudential regulation on banks and other depository institutions, issued its document in August. It specifically mentions U.S.-based fintech companies, meaning once the standard is finalized, it is likely to lead to U.S.-based fintech companies being regulated more like credit unions and banks.
In Its letter, the World Council also urged the committee to limit regulatory burdens on credit unions that use fintech companies as service providers by making sure their rules are proportional to credit unions’ size and complexity.
Additional information and a link to the letter can be found on the World Council’s Advocate blog.