The NCUA has been barred from participating in an interagency fintech discussion forum—a decision that has kept the agency from exchanging vital information with other regulators, the GAO said in a new report.

In reviewing the regulatory framework that fintech firms must follow, the GAO found that the NCUA was kept out of an Interagency Fintech Discussion Forum and the Interagency on Marketplace Lending—two groups that share information about the emerging fintech industry.

The Federal Reserve kept the NCUA from the fintech discussion forum because it is not a banking regulator, the GAO reported. However, Fed officials told the GAO that the NCUA will be invited in the future and NCUA officials said they would be willing to participate.

The discussion forum meets about every four-to-six weeks to share information about fintech consumer protection and supervisory outcomes.

The marketplace working group was active in 2016 and consisted of industry participants and public interest groups discussing the risk and benefits that had been discussed in a 2016 Treasury Department report on marketplace lending. Treasury officials said they most likely will not reconvene the group and that Treasury staff who might have been able to explain why the NCUA was left out of the group no longer worked for the department.

GAO made several recommendations, including one that said the Fed should inite the NCUA to join the discussion forum.

“The Chairman of the National Credit Union Administration should engage in collaborative discussions with other relevant financial regulators in a group that includes all relevant stakeholders and has defined agency roles and outcomes to address issues related to consumers' use of account aggregation services,” the GAO said.

The NCUA has experiences that would make it a relevant participant in the interagency discussion forum, GAO added.

“NCUA would be a relevant participant because, although it does not oversee banks, it oversees credit unions that have entered into partnerships with fintech lenders and virtual currency exchanges, and could enter into partnerships with other fintech firms,” the GAO said.

In addition, the NCUA has identified fintech as a key risk for credit unions since they could compete against credit unions for business.

The GAO also said that the NCUA is particularly challenged in attempting to regulate fintech firms since it does not have authority over third-party vendors.

And the GAO said that regulators, in general, should do a better job of supervising fintech companies.

“Given their mandated consumer protection missions, regulators could act collaboratively to better ensure that consumers avoid financial harm and continue to benefit from these services.,” the GAO said.

GAO said that fintech products pose similar risks as other financial providers, but those risks may not be addressed by current laws or rules. In addition, regulators and others warned that fintech firms create data security and privacy risks that could threaten overall financial stability as the industry grows.

At the same time, indications of widespread consumer harm from the firms appear to be limited, the report states.

But GAO said that given their mandated consumer protection missions, regulators could act collaboratively to better ensure that consumers avoid financial harm and continue to benefit from these services.

Instant Insights /

Federal Reserve Barred NCUA From Fintech Discussion Forum: GAO

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