In a significant regulatory update, the Federal Deposit Insurance Corporation (FDIC) has rated a fintech bank as needing improvement in its adherence to the Community Reinvestment Act (CRA), amidst allegations of FTC Act violations. This rating emerged from the FDIC’s latest list of nonmember banks examined for CRA compliance.
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details released by the FDIC on September 5 pinpoint that the fintech bank in question has room to bolster its practices in helping to meet local credit needs, a primary premise of the CRA. The CRA, a federal law enacted in the United States, encourages insured banks and thrifts to be responsive to the credit requirements of the communities in which they conduct business.
These allegations of violations of the FTC Act are a further dent to the institution’s compliance record. Also known as the Federal Trade Commission Act, this foundational law regulates unfair or deceptive competition practices that can negatively impact consumers. Details regarding the nature and extent of these purported violations by the fintech banking entity have not been disclosed to the public yet.
While the rating and allegations pose a challenging regulatory environment for the fintech bank, it offers a reminder to all stakeholders in the industry about the importance of compliance with legal and regulatory expectations. Further developments in this scenario will be followed with interest by corporate legal professionals interested in fintech, banking, and compliance.