Congressman Patrick McHenry, the Chief Deputy Whip of the House, has introduced new legislation designed to boost Fintech innovation in the US. Today, the US may be the financial center of the world but in some respects, the country is slipping behind when it comes to innovation emanating out of other financial centers. HR 6118 or the “Financial Services Innovation Act of 2016, is part of the broader Innovation Initiative created by McHenry and House Majority Leader Kevin McCarthy. HR 6188, as it is currently worded, will establish a regulatory framework that helps Fintech firms and startups gain the access and flexibility they need to innovate and experiment. The legislation will mandate that 12 different regulators must establish “Financial Services Innovation Offices or FSIOs within their agencies. Firms may apply for an “enforceable compliance agreement” with the FSIOs that, if accepted, will allow them to provide an innovative product or service under an alternative compliance plan, which modifies regulation that is antiquated or unduly burdensome. The plan will bring the US in closer alignment with the countries that have already established similar offices or regulatory Sandboxes.
Congressman McHenry released a statement on the proposal;
“For generations, America has been the world’s leader in innovation, spanning a variety of fields from transportation to medicine to software. One area we’re falling behind, is the financial services industry. The bill I introduced today changes that. The Financial Services Innovation Act represents a mindset shift in the way we address financial regulation,” said McHenry. “Rather than the command-and-control structure of the past, my bill establishes an evolved regulatory framework that encourages financial innovation, all while maintaining our regulators’ commitment to the safety of consumers and our financial markets.”
McHenry explained that ultimately benefits the American people. Fintech innovation may provide superior financial services for all consumers – at a far lower cost.
“New financial technologies already make it easier to pay friends, save for college, or access credit needed to start and grow a business,” stated McHenry. “Continued innovation will only further that progress, making it easier and cheaper for all Americans to access our financial system.”
There will be a formal presentation later today at the Fintech Policy Forum (@4:05PM) during a speech at the Electronic Transactions Association.
Now the question is will this bill get the bipartisan support necessary to bring it into law. Too frequently common sense legislation gets shot down soley based on party affiliation. Hopefully, both sides of the fence will recognize the benefit to US consumers and Fintech entrepreneurs.