Consumer Financial Services Watch

News and developments related to consumer financial services, litigation, and enforcement.

 

1
Massachusetts issues guidelines for using third-party robo-advisers
2
Bank of England Launches FinTech Accelerator
3
Bridging the Great Divide: Collaboration Considerations for Banks and Marketplace Lenders
4
Hot Topics in FinTech Litigation
5
K&L Gates Invitation: Brexit Q&A Conference Call
6
The Financial CHOICE Act; Legislative Text Revealed
7
U.S. Supreme Court Declines to Consider Whether National Bank Act Preemption Extends to Purchasers of Debt Originated by National Banks
8
It’s Time For An Upgrade — Outdated Technology Puts Mortgages Servicers At Risk For Increased CFPB Scrutiny and Potential Servicing Violations
9
BREXIT Vote to Leave Expected to Lead to a Period of Uncertainty
10
U.S. District Court (Again) Rules that Parties Can Challenge a CFPB Information Request Without Revealing Their Identities

Massachusetts issues guidelines for using third-party robo-advisers

By Susan P. Altman and C. Todd Gibson

In April 2016, the Massachusetts Securities Division issued a policy statement with respect to the fiduciary obligations of state-registered advisers providing robo-advice. The MSD has now issued further regulatory guidance in a new Policy Statement with respect to the use of third-party robo-advisers by state-registered investment advisers. The MSD noted the significant growth in popularity of third-party robo-advisers and the increasing number of state-registered investment advisers working with third-party robo-advisers.

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Bank of England Launches FinTech Accelerator

By Jonathan Lawrence

On 17 June 2016 the Governor of the Bank of England announced that the Bank is launching a FinTech Accelerator to work in partnership with FinTech firms to harness innovations for its own requirements as a central bank. In return, it will offer firms the chance to demonstrate their solutions for issues facing policymakers. The Accelerator will deploy innovative technologies on issues that matter to the Bank’s mission and operations. The Accelerator will appoint FinTech firms to run short Proof of Concept (POC) projects in a number of priority areas.

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Bridging the Great Divide: Collaboration Considerations for Banks and Marketplace Lenders

By Anthony R.G. Nolan, Edward Dartley, Sonia R. Gioseffi, Joseph A. Valenti, Christopher J. Scully and Christopher H. Bell

Marketplace lending has grown dramatically over the last several years, but it still remains a nascent industry. As it continues to expand its reach, players in the industry and the traditional banking/investment sector are discovering the mutual benefits of cooperation. While marketplace lending often has been heralded as a disruptor of traditional banking, industry participants are being presented with opportunities to collaborate with banking institutions as the industry matures.

To read the full alert, click here.

Hot Topics in FinTech Litigation

As the FinTech ecosystem continues to grow, buoyed in part by the growing surge in innovation, regulation and globalization, there has been an uptick in litigation concerns impacting FinTech companies.

Please join two of our seasoned financial services litigators for a webinar addressing hot topics in FinTech litigation, from marketplace lending to blockchain technology and more.

Thursday, August 4,2016 at 1:00 EDT

The webinar will wrap up with our thoughts on anticipated litigation trends and time for Q&A.

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K&L Gates Invitation: Brexit Q&A Conference Call

Following the UK referendum vote on June 23rd to leave the European Union, businesses and individuals around the world are closely monitoring the emerging political, business and economic situation.

K&L Gates will be hosting the first in a series of Brexit Q&A Conference Calls on Tuesday July 5th 2016 at 5:00 pm BST (09:00 am PDT, 12:00 pm EDT) where we will be providing answers to the multi-disciplinary challenges faced by our clients dealing with the legal implications of Brexit negotiations.

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The Financial CHOICE Act; Legislative Text Revealed

By Daniel F. C. Crowley, Bruce J. Heiman, William A. Kirk, Karishma Shah Page, Mark A. Roszak and Eric A. Love

On June 23, 2016, House Financial Services Committee Chairman Jeb Hensarling (R-TX) released as a “discussion draft” legislative text of the Financial CHOICE Act (“FCA”), a proposal to reform the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”).

Importantly, the FCA is more than just another Dodd-Frank reform proposal; it is the culmination of several years of House Financial Services Committee activity. Many of its provisions enjoy bipartisan support at a time when Brexit focuses attention on global financial regulatory reform. Therefore, we anticipate that the bill is likely to be marked up before the election, and it could be a road map for post-election reform. In addition, some of its provisions could be enacted in year-end omnibus legislation.

To read the full alert, click here.

U.S. Supreme Court Declines to Consider Whether National Bank Act Preemption Extends to Purchasers of Debt Originated by National Banks

By Andrew C. Glass and Roger L. Smerage

On Monday, the United States Supreme Court decided not to review whether National Bank Act preemption, which provides national banks with a safe harbor from state usury laws, extends to third-parties that purchase and collect debt originated by national banks. The decision to deny certiorari in Midland Funding, LLC v. Madden, No. 15-610 (U.S. Nov. 10, 2015) (“Madden”), leaves intact a May 2015 decision of the Court of Appeals for the Second Circuit. The Second Circuit had ruled that National Bank Act preemption only applies to purchasers of national-bank-originated debt where the purchaser is a subsidiary or agent of, or is otherwise acting on behalf of, a national bank. (The K&L Gates alert regarding the Second Circuit decision can be found here.)

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It’s Time For An Upgrade — Outdated Technology Puts Mortgages Servicers At Risk For Increased CFPB Scrutiny and Potential Servicing Violations

By Brian M. Forbes, Soyong Cho, and Hollee M. Watson

More than two years have passed since the Consumer Financial Protection Bureau (“CFPB”) implemented comprehensive amendments to the loan servicing provisions of Regulation X. Mortgage servicers have had to invest in technology and human capital to keep up with new regulatory requirements while saddled with expanded duties to respond to borrower inquires, disputes, and requests for information, in addition to new and extensive loss mitigation requirements. Outdated technology has put servicers at risk for increased enforcement and litigation issues. But, as the CFPB has noted, the problems are not “insurmountable.”

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BREXIT Vote to Leave Expected to Lead to a Period of Uncertainty

London – The UK’s historic vote to leave the European Union (EU) will have significant consequences throughout the UK, the EU, and in the global economy. The referendum vote is expected to lead to a high degree of uncertainty and disruption as businesses come to terms with the new normal of a post-Brexit environment. Businesses, governments, and regulatory bodies will need to take measures to adjust to the legal, financial, regulatory and technical ramifications of the referendum.

To fully prepare clients for the legal and business implications and potential disruption to their companies, K&L Gates LLP is directing clients and others to a suite of resources it has created to bridge any concerns brought on by the vote to leave.

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U.S. District Court (Again) Rules that Parties Can Challenge a CFPB Information Request Without Revealing Their Identities

By: Ted Kornobis

Last week, a federal court issued an opinion supporting the ability of an entity to file a court challenge to Consumer Financial Protection Bureau (“CFPB”) information requests without necessarily needing to “out” itself as a potential investigation target. Specifically, the court reaffirmed a prior ruling that recipients of a CFPB civil investigative demand (“CID”) who were potential targets of an enforcement action could challenge the CFPB’s attempt to take certain testimony by proceeding as “John Doe” plaintiffs in a federal injunctive action. The district court first allowed the plaintiffs to proceed pseudonymously late last year, and last week’s order denied the CFPB’s motion for reconsideration. A description of the case background and judge’s original decision may be found in our earlier post on this case.

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