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Notes

H.R. 7440 — what changed

Financial Services Innovation Act of 2024

From Introduced in House to Reported in House. 7 sections amended between Introduced in House and Reported in House.

Sec. 2 Definitions

In this Act, the following definitions shall apply:

(1)
added Agency— The term agency means each of the Board of Governors of the Federal Reserve System, the Bureau of Consumer Financial Protection, the Department of Housing and Urban Development, the Department of the Treasury, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission.
(2)
renumbered was (3) Agency regulation— The term agency regulation means—
(A)
renumbered was (3)(3) a rule (as defined in section 551 of title 5, United States Code) issued by an agency;
(B)
renumbered was (3)(4) guidance issued by an agency; or
(C)
added a published, proposed, or interim rule, policy statement, directive, adjudication, or interpretation of an agency.
(C)
removed a published proposed or interim rule, policy statement, directive, adjudication, or interpretation of an agency.
(2)
removed Agency— The term agency means each of the Board of Governors of the Federal Reserve System, the Bureau of Consumer Financial Protection, the Department of Housing and Urban Development, the Department of the Treasury, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the National Credit Union Administration Board, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission.
(3)
changed Covered person—Bank Secrecy Act— The term covered person means a person that offers or intends to offer a financial innovation by submitting a petition to a Financial Services Innovation Office at one or more agencies.“Bank Secrecy Act” means—
(A)
added section 21 of the Federal Deposit Insurance Act (12 U.S.C. 1829b);
(B)
added chapter 2 of title I of Public Law 91–508 (12 U.S.C. 1951 et seq.); and
(C)
added subchapter II of chapter 53 of title 31, United States Code.
(4)
Enforceable compliance agreement— The term enforceable compliance agreement means an agreement described under section 8.
(5)
Financial innovation— The term financial innovation means a financial product or service (as defined in section 1002 of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5481))—
(A)
the delivery of which is enabled by technology; and
(B)
that is or may be subject to an agency regulation or Federal statute.
(6)
changed Financial Services Innovation Office; FSIO— The term FSIO means a Financial Services Innovative Innovation Office or FSIO means an office established in an agency pursuant to section 4.
(7)
added Person— The term person means an individual, partnership, company, corporation, association, trust, estate, cooperative organization, or other entity.

Sec. 4 Establishment or designation of FSIO at agencies

(a)
changed In general— Each agency shall establish or designate an office within the agency to be known as the “Financial Services Innovation Office” of the “FSIO”. Office”. Each such Financial Services Innovation Office shall to promote financial innovations and to assist a covered person with an persons whose petitions are approved petition under section 7.
(b)
Administration— Each agency shall designate an individual to serve as the head of the agency’s FSIO.
(c)
Duties—
(1)
changed General duties— Each agency, acting through the The head of each agency’s FSIO, FSIO shall—
(A)
support the development of financial innovations;
(B)
coordinate with FSIOs at other agencies to share information and data about financial innovations;
(C)
upon request, coordinate with relevant State regulatory entities to provide information to the public with respect to financial innovations and agency regulations related to such financial innovations; and
(D)
establish procedures to reduce the regulatory burden of offering a financial innovation to the public and enable greater access to financial innovations.
(2)
changed Duties for petitions— With respect to a covered person with an approved petition under section 7, the head of each agency’s FSIO shall—
(A)
changed work with the covered person to address issues of how existing regulatory frameworks of the agency apply to the financial innovation that is the subject of the petition;
(B)
changed assist the covered person in complying with the any requirements of Federal regulators of the agency with respect to the financial innovation; and
(C)
changed assist the covered person in responding to any challenges to a modification or a waiver granted under subsection (d).
(d)
changed Waiver authority— An The head of each agency, acting through the agency’s FSIO, may modify or waive the application of an agency regulation of the agency or the a Federal statute under which the agency has rulemaking authority if—
(1)
changed a petition of the covered person has been approved under section 7; and
(2)
changed the agency determines that compliance with such agency regulation or Federal statute would impede the ability of a covered person to offer the financial innovation that is the subject of the petition.
(e)
Termination of other programs; transfer of authority—
(1)
changed In general— Not later than 90 days after the establishment or designation of a FSIO at an agency, the agency shall modify any offices or programs at the agency that promote financial innovations or assist covered persons in offering financial innovations, and merge or transfer the operations of such offices or programs into the FSIO.
(2)
changed Legal actions or proceedings—Transfer of authority— On the date that is 90 days after the establishment or designation of a FSIO at an agency, any legal action or proceeding commenced by or against the administration of any other offices rule, policy, or programs at the prior agency that promote determinations relating to promoting financial innovations or assist covered assisting persons in offering financial innovations, including no-action letters and staff advisory opinions, shall be transferred to the FSIO of that agency.
(f)
changed Report— Not later than 6 months after the date of the enactment of this Act, and annually thereafter, each agency shall present testimony to the Congress and submit a report to the Congress and to the Financial Stability Oversight Council on the activities of the FSIO of such agency, including a description of the petitions considered, the rationale for acceptance or rejection of petitions, and the efforts of the FSIO to encourage financial innovations.
(g)
removed Elimination of FSIO— If an agency has not received a petition described in section 6 within 5 years of the date of the establishment of the FSIO of such agency, the agency shall eliminate the FSIO. Such agency shall continue to comply with the requirements of any multiparty agreement entered into pursuant to section 8(c) on or before the date of such elimination.

Sec. 5 FSIO Liaison Committee and chair

(a)
Establishment— Not later than 60 days after the date of the enactment of this Act, the agencies shall establish a committee to be known as the “FSIO Liaison Committee”.
(b)
Members— The FSIO Liaison Committee shall be composed of the head of each FSIO described under section 4 and a State banking supervisor selected by the Conference of State Bank Supervisors (or a successor organization).
(c)
Duties— The FSIO Liaison Committee shall—
(1)
changed consult on the administration, coordination, and oversight with the FSIO of each agency;
(2)
facilitate the cooperation of each FSIO to ensure that agencies share information and data on petitions submitted under section 6;
(3)
monitor proposals for agency regulation and developments related to financial innovations;
(4)
encourage the application of uniform principles and standards at each FSIO; and
(5)
facilitate collaboration with relevant State regulatory entities to provide information to the public with respect to financial innovations and agency regulations related to such financial innovations.
(d)
Meetings— The FSIO Liaison Committee shall meet at least twice a year.
(e)
Chair—
(1)
Establishment— The first Chair of the FSIO Liaison Committee shall be elected by the members. The Chair shall serve for a term of 2 years and thereafter the chairmanship shall rotate among the members of the committee.
(2)
Powers of the Chair— The Chair is authorized to carry out the internal administration of the FSIO Liaison Committee, including the appointment and supervision of employees and the distribution of tasks among members, employees, and administrative units.
(f)
changed Testimony— Not later than 6 months after the date of the enactment of this Act, and annually thereafter, the Chair of the FSIO Liaison Committee shall present testimony to the Congress on the activities of the FSIO Liaison Committee.
(g)
Funding—
(1)
Compensation of members— Each member of the FSIO Liaison Committee shall serve without additional compensation but shall be entitled to reasonable expenses incurred in carrying out official duties as such a member.
(2)
changed General expenses— The costs and expenses of the FSIO Liaison Committee, including the salaries of employees, shall be split equally between, and paid by, each agency other than an agency that has eliminated the agency’s FSIO pursuant to section 4(g).agency.

Sec. 6 Petition to agency

(a)
changed In general— A covered person may submit a petition to an agency, through the agency’s FSIO, in such form and in such manner as the agency’s FSIO may require, to request to enter into an enforceable compliance agreement containing a modification or waiver of an agency regulation of the agency or the Federal statute under which the agency has rulemaking authority with respect to—
(1)
changed the covered person; or
(2)
changed a financial innovation the covered person offers or intends to offer.
(b)
changed Contents— In a petition submitted under this section, the covered person shall—
(1)
changed submit an alternative compliance strategy that proposes a method to comply with identify any requirement under which the agency has rulemaking authority or the agency regulation of the agency for which the person is requesting a modification or Federal statutory requirement; andwaiver;
(2)
added explain why such modification or waiver is essential to the operation of the person;
(3)
added submit an alternative compliance strategy that proposes a method to comply with such requirement or agency regulation;
(4)
renumbered was (3)(4) demonstrate that under the alternative compliance strategy, the financial innovation—
(A)
renumbered was (3)(4)(2) would serve the public interest;
(B)
renumbered was (3)(4)(3) improves consumer access to a financial product or service;
(C)
added would not present a national security risk to the United States;
(D)
added would meet the purposes of anti-money laundering and countering the financing of terrorism obligations under the Bank Secrecy Act;
(E)
renumbered was (3)(4)(4) would not present systemic risk to the United States financial system; and
(F)
added would promote consumer protection;
(5)
added provide a detailed business plan; and
(6)
added propose a date on which an enforceable compliance agreement would terminate and explain why such termination date would be appropriate.
(D)
removed would promote consumer protection.
(c)
changed Multiparty petitions— One or more covered persons that offer or intend to offer similar financial innovations may jointly submit a petition under this section.
(d)
changed Safe harbor—Notice and comment—
(1)
removed In general— During the period after a covered person submits a petition under this section and before the agency receiving the petition makes a determination on the petition pursuant to section 7, an agency may not take an enforcement action against a covered person relating to the financial innovation that was the subject of the petition.
(2)
removed Injunctive relief— If an agency determines that a financial innovation described under paragraph (1) presents an immediate danger to consumers or presents systemic risk to the United States financial system, the agency may apply to a court of competent jurisdiction for an injunction to prohibit a covered person from offering such financial innovation during the period described in paragraph (1).
(3)
removed Preservation of anti-fraud authority— This subsection shall not apply to the authority of an agency to take an enforcement action against a covered person with respect to fraud relating to the financial innovation that was the subject of the petition.
(e)
removed Notice and comment—
(1)
renumbered was (6)(2) In general— Not later than 30 days after receiving a petition, the agency that receives the petition shall publish the petition in the Federal Register and provide a 60-day period for public notice and comment.
(2)
added Exception for notice and comment period— The agency that receives the petition may waive the notice and comment period described in paragraph (1) if such agency determines that the person submitting the petition is similarly situated to another person that has been granted approval of a petition pursuant to section 7.
(3)
added Confidentiality— The agency shall maintain the confidentiality of any nonpublicly available data or information in any petition submitted under this section. The agency shall give reasonable consideration to maintaining the confidentiality of data or information identified by the person in the petition submitted under this section.
(2)
removed Exception for notice and comment period— The agency that receives the petition may waive the notice and comment period described in paragraph (1) if such agency determines that the covered person submitting the petition is similarly situated to another covered person that has been granted approval of a petition pursuant to section 7.
(3)
removed Confidentiality— The agency shall maintain the confidentiality of any nonpublicly available data or information in any petition submitted under this section. The agency shall give reasonable consideration to maintaining the confidentiality of data or information identified by the covered person in the petition submitting under this section as nonpublicly available data or information.

Sec. 7 Agency determination of petition

(a)
changed In general— Not later than 30 days after the end of the comment period described under section 6 (or if the comment period was waived, not later than 60 90 days after receipt of a petition under section 6), the head of the agency receiving the petition shall complete a review of the petition and notify the covered person, person who submitted the petition, in writing, of the agency’s determination of the petition.
(b)
added Approval of petition—
(1)
added In general— An agency shall approve a petition if the agency has determined that—
(A)
added the alternative compliance strategy proposed by the person in the petition satisfies the requirements described in section 6(b)(4); and
(B)
added the person who submitted the petition has, with respect to the financial innovation the person offers or intends to offer, sufficiently identified—
(i)
added the regulations and Federal statutes of which the person is seeking waiver or modification; and
(ii)
added other applicable regulations and Federal statutes with which the person intends to comply.
(b)
removed Approval— If the covered person submitting the petition shows that it is more likely than not that the covered person meets the requirements for establishing an alternative compliance strategy, the agency shall—
(2)
changed Notification to State regulatory agencies— approve If an agency approves a petition, the petition; andagency shall, with respect to each State regulatory agency with jurisdiction over the person who submitted the petition or the financial innovation about which the person submitted the petition—
(A)
added notify such State regulatory agency that the agency has approved the petition; and
(B)
added provide such State regulatory agency information about the terms of the enforceable compliance agreement entered into between the person and the agency.
(2)
removed enter into an enforceable compliance agreement with the covered person in accordance with the requirements of section 8.
(c)
changed Disapproval—Disapproval of petition—
(1)
changed Explanation—In general— If the An agency disapproves may disapprove a petition, petition if the agency head shall provide the covered person with a written notice explaining the reason for such disapproval, including—has determined that—
(A)
changed evidence that the covered alternative compliance strategy proposed by the person did in the petition does not satisfy the requirements for establishing an alternative compliance strategy;described in section 6(b)(4); or
(B)
changed an identification of any agency regulations or Federal statutes applicable to the covered person who submitted the petition has not, with respect to the financial innovation that were omitted from the petition; andperson offers or intends to offer, sufficiently identified—
(i)
added the regulations and Federal statutes of which the person is seeking waiver or modification; and
(ii)
added other applicable regulations and Federal statutes with which the person intends to comply.
(C)
removed a description of—
(i)
removed any beneficial effects, including an identification of persons likely to benefit, from rejecting the petition;
(ii)
removed any potential costs, including an identification of persons likely to bear the costs, of rejecting the petition; and
(iii)
removed the baseline used by the agency to measure the likely economic consequences of rejecting the petition.
(2)
changed Resubmittal—Written notice required— Receipt of a notice of disapproval of If an agency disapproves a petition under this subsection the agency shall not preclude a covered provide the person from revising and resubmitting such who submitted the petition to with a written notice explaining the agency under section 6.reason for such disapproval and such written notice shall include a description of—
(A)
added any benefits of disapproving the petition, including an identification of persons likely to benefit from the disapproval of the petition;
(B)
added any costs, including potential costs, of disapproving the petition, including an identification of persons likely to bear the costs associated with the disapproval of the petition; and
(C)
added the baseline used by the agency to determine the likely economic consequences of disapproving the petition.
(d)
changed Moratorium—Resubmittal— If an agency disapproves Receipt of a notice of disapproval of a petition submitted in good faith under this section, the agency subsection shall provide the covered person not preclude a reasonable amount of time before the agency takes an enforcement action against the covered person relating from revising and resubmitting such petition to the financial innovation that was the subject of the petition.agency under section 6.
(e)
changed Judicial review— A covered person may seek judicial review of an agency’s determination on a petition in accordance with subchapter II of chapter 5 of title 5, United States Code, and chapter 7 of such title (commonly known as the “Administrative Procedure Act”).

Sec. 8 Enforceable compliance agreement

(a)
changed In general— If an agency approves a petition under section 7, the covered person who submitted such petition shall enter into an enforceable compliance agreement with the such agency, which shall include—
(1)
the terms under which the approved financial innovation may be developed or offered to the public; and
(2)
changed any requirements of the covered person and any such agency with respect to the financial innovation.
(b)
Requirements— Each agency, by rule, shall establish requirements relating to enforceable compliance agreements that include—
(1)
procedures for modifying the terms of the agreement;
(2)
consequences for failure to comply with the terms of the agreement;
(3)
a compliance examination process that—
(A)
solicits feedback from other agencies on the agreement; and
(B)
occurs not less frequently than annually;
(4)
changed a termination date for the agreement that is at least 1 year and not more than 3 years after the date on which the agreement is entered into;
(5)
changed procedures and standards for extending the termination date;date, including procedures and standards for evaluating the effectiveness of the agreement; and
(6)
removed procedures for judicial review of another agency’s or State’s challenge to the agreement in accordance with subchapter II of chapter 5 of title 5, United States Code, and chapter 7 of such title (commonly known as the “Administrative Procedure Act”); and
(6)
renumbered was (3)(9) procedures for maintaining the confidentiality of any information disclosed to the agency during the process of drafting and entering into agreement.
(c)
changed Multiparty agreements—Joining of agreement by additional agencies— With respect to a financial innovation that is the subject of an enforceable compliance agreement entered into under this section, an agency that did not enter into such enforceable compliance agreement may join as a party to the enforceable compliance agreement entered into pursuant to this section.
(d)
added Enforcement actions by non-party agencies— An agency that is not a party to an enforceable compliance agreement entered into under this section—
(d)
removed Limitation on enforcement actions—
(1)
removed In general— If a covered person and an agency enter into an enforceable compliance agreement—
(A)
removed another agency that is not party to the multiparty agreement described in subsection (c) may not commence an enforcement action against the covered person with respect to the financial innovation that is the subject of the enforceable compliance agreement; and
(B)
removed a State may not commence an enforcement action against the covered person with respect to the financial innovation that is the subject of the enforceable compliance agreement, if the covered person provides the State with—
(i)
removed the enforcement compliance agreement; and
(ii)
removed a statement of policies and procedures the covered person has in place to comply with State laws that are applicable to the financial innovation.
(1)
changed State exception for consumer harm— Notwithstanding paragraph (1)(B), a State may commence an enforcement action not attempt to enforce, against a covered the person with respect to a financial innovation that who is party to the subject of an enforceable compliance agreement if, in an action brought agreement, any regulation or Federal statute modified or waived by the State in a court of competent jurisdiction, the court determines that the agency’s action was arbitrary and capricious and the financial innovation has substantially harmed consumers within such State.enforceable compliance agreement; and
(2)
added may continue to enforce, against the person who is party to the enforceable compliance agreement, any regulation or Federal law over which the agency has enforcement authority that has not been modified or waived by the enforceable compliance agreement.
(e)
changed Arbitration— A covered person who is party to the enforceable compliance agreement may elect to arbitrate any action initiated by another person relating to a financial innovation that is the subject of the enforceable compliance agreement.
(f)
added Rule of construction— Nothing in this Act shall be construed to limit the ability of an agency to enforce the requirements of an enforceable compliance agreement entered into under this Act.

Sec. 9 Report to Congress

changed Not later than 1 year after the date of the enactment of this Act, and annually thereafter, the Financial Stability Oversight Council shall submit to the Congress a report on the aggregate impact of enforceable compliance agreements entered into under this Act, which shall include—

(1)
the number and characteristics of the agreements;
(2)
changed the most innovative and least burdensome tools that the agency’s FSIO has agencies’ FSIOs have implemented to allow a financial innovation that is the subject of an enforceable compliance agreement to be offered;
(3)
strategies implemented to coordinate and facilitate cooperation among FSIOs;
(4)
changed the existing Federal and State laws, regulations, or practices (including guidance materials, examinations, and enforcement proceedings and settlements) that the Financial Stability Oversight Council identifies as the most burdensome to innovation that adversely affect competition in the financial services industry, or that restrict improvements for consumers of financial products or services; and
(5)
an identification of the overlap or fragmentation of agency regulations of financial products or services and recommendations for reducing, consolidating, or eliminating such overlap or fragmentation.