Financial Services Innovation Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 4767 To promote innovation in financial services, and for other purposes. IN THE HOUSE OF REPRESENTATIVES OCTOBER 21, 2019 Mr. MCHENRY introduced the following bill; which was referred to the Com- mittee on Financial Services, and in addition to the Committee on Agri- culture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdic- tion of the committee concerned A BILL To promote innovation in financial services, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Financial Services Innovation Act of 2019’’. 5 (b) TABLE OF CONTENTS.—The table of contents for 6 this Act is as follows: 7 Sec. 1. Short title; table of contents. Sec. 2. Definitions. Sec. 3. Agency identification of regulatory areas. Sec. 4. Establishment of FSIO at agencies. Sec. 5. FSIO Liaison Committee and chair. VerDate Sep 11 2014 20:30 Oct 25, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6211 E:\BILLS\H4767.IH H4767 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 4767 IH Sec. 6. Petition to agency. Sec. 7. Agency determination of petition. Sec. 8. Enforceable compliance agreement. Sec. 9. Report to Congress. Sec. 10. Funding. SEC. 2. DEFINITIONS. 1 In this Act, the following definitions shall apply: 2 (1) AGENCY REGULATION.—The term ‘‘agency 3 regulation’’ means— 4 (A) a rule (as defined in section 551 of 5 title 5, United States Code) issued by an agen- 6 cy; 7 (B) guidance issued by an agency; or 8 (C) a published proposed or interim rule, 9 policy statement, directive, adjudication, or in- 10 terpretation of an agency. 11 (2) AGENCY.—The term ‘‘agency’’ means each 12 of the Board of Governors of the Federal Reserve 13 System, the Bureau of Consumer Financial Protec- 14 tion, the Commodity Futures Trading Commission, 15 the Department of the Treasury, the Federal De- 16 posit Insurance Corporation, the Federal Housing 17 Finance Agency, the Federal Trade Commission, the 18 National Credit Union Administration Board, the 19 Office of the Comptroller of the Currency, and the 20 Securities and Exchange Commission. 21 (3) COVERED PERSON.—The term ‘‘covered 22 person’’ means a person that offers or intends to 23 VerDate Sep 11 2014 20:30 Oct 25, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4767.IH H4767 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 4767 IH offer a financial innovation by submitting a petition 1 to a Financial Services Innovation Office at one or 2 more agencies. 3 (4) ENFORCEABLE COMPLIANCE AGREE- 4 MENT.—The term ‘‘enforceable compliance agree- 5 ment’’ means a contractual agreement described 6 under section 8. 7 (5) FINANCIAL INNOVATION.—The term ‘‘finan- 8 cial innovation’’ means an innovative financial serv- 9 ice or product, the delivery of which is enabled by 10 technology, that is or may be subject to an agency 11 regulation or Federal statute. 12 (6) FINANCIAL SERVICES INNOVATION OFFICE 13 OR FSIO.—The term ‘‘Financial Services Innovative 14 Office’’ or ‘‘FSIO’’ means an office established in an 15 agency pursuant to section 5. 16 SEC. 3. AGENCY IDENTIFICATION OF REGULATORY AREAS. 17 Not later than 60 days after the date of the enact- 18 ment of this Act, and biannually thereafter, each agency 19 shall publish in the Federal Register a nonexclusive list 20 that identifies 3 or more areas of existing regulation— 21 (1) that apply or may apply to a financial inno- 22 vation; and 23 VerDate Sep 11 2014 20:30 Oct 25, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4767.IH H4767 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 4767 IH (2) that the agency would consider modifying or 1 waiving if the agency were to receive a petition 2 under section 6 relating to that regulation. 3 SEC. 4. ESTABLISHMENT OF FSIO AT AGENCIES. 4 (a) IN GENERAL.—Each agency shall establish a Fi- 5 nancial Services Innovation Office (known as ‘‘FSIO’’) to 6 promote financial innovations and to assist a covered per- 7 son whose petition has been approved under section 7. 8 (b) DIRECTOR.—Each agency shall appoint an indi- 9 vidual to serve as the Director of the agency’s FSIO. 10 (c) DUTIES.— 11 (1) GENERAL DUTIES.—Each agency, acting 12 through the agency’s FSIO, shall— 13 (A) support the development of financial 14 innovations; 15 (B) coordinate with FSIOs at other agen- 16 cies to share information and data; and 17 (C) establish procedures to reduce the time 18 and cost of offering a financial innovation to 19 the public and enable greater access to financial 20 innovations. 21 (2) DUTIES FOR PETITIONS.—With respect to a 22 covered person whose petition has been approved 23 under section 7, each FSIO shall— 24 VerDate Sep 11 2014 20:30 Oct 25, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4767.IH H4767 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 4767 IH (A) work with the covered person to ad- 1 dress issues of how existing regulatory frame- 2 works apply to the financial innovation that is 3 the subject of the petition; 4 (B) assist the covered person in complying 5 with the requirements of Federal regulators of 6 the financial innovation; and 7 (C) assist the covered person in responding 8 to any challenges to a modification or a waiver 9 granted under subsection (d). 10 (d) WAIVER AUTHORITY.—With respect to a covered 11 person whose petition has been approved under section 7, 12 if an agency has a rational basis for doing so and if the 13 agency determines that a provision of a Federal statute 14 under which the agency has rulemaking authority or an 15 agency regulation is unduly burdensome to the covered 16 person, the agency shall, acting through the agency’s 17 FSIO, modify or waive the application of the Federal stat- 18 ute or the agency regulation. 19 (e) TERMINATION OF OTHER PROGRAMS; TRANSFER 20 OF AUTHORITY.—Not later than 90 days after the estab- 21 lishment of a FSIO at an agency, the agency shall modify 22 any offices or programs at the agency that promote finan- 23 cial innovations or assist covered persons in developing fi- 24 nancial innovations to operate within the FSIO. Any legal 25 VerDate Sep 11 2014 20:30 Oct 25, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4767.IH H4767 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 4767 IH action or proceeding commenced by or against such office 1 or program of the agency, including no-action letters and 2 staff advisory opinions, shall be transferred to the FSIO 3 of that agency. 4 (f) REPORT.—Not later than 6 months after the date 5 of the enactment of this Act, and annually thereafter, each 6 agency shall submit a report to Congress and to the Fi- 7 nancial Stability Oversight Council, and shall present tes- 8 timony to Congress, on the activities of the FSIO, includ- 9 ing a description of the petitions considered, the rationale 10 for acceptance or rejection of petitions, and the efforts of 11 the FSIO to encourage financial innovations. 12 (g) SUNSET.—If an agency has not received a peti- 13 tion described in section 6 within 5 years of the date of 14 the establishment of the agency’s FSIO, the agency shall 15 eliminate the FSIO, while continuing to honor any en- 16 forceable compliance agreement of another agency. 17 SEC. 5. FSIO LIAISON COMMITTEE AND CHAIR. 18 (a) ESTABLISHMENT.—Not later than 60 days after 19 the date of the enactment of this Act, the agencies shall 20 establish a committee to be known as the ‘‘FSIO Liaison 21 Committee’’. 22 (b) MEMBERS.—The FSIO Liaison Committee shall 23 be composed of the Director of each FSIO office and a 24 VerDate Sep 11 2014 20:30 Oct 25, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4767.IH H4767 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 4767 IH State banking supervisor selected by the Conference of 1 State Bank Supervisors (or a successor organization). 2 (c) DUTIES.—The FSIO Liaison Committee shall— 3 (1) consult on the administration, coordination, 4 and oversight of each agency’s FSIO; 5 (2) facilitate the cooperation of each FSIO to 6 ensure that agencies share information and data on 7 petitions submitted under section 6; 8 (3) monitor regulatory proposals and develop- 9 ments related to financial innovations; 10 (4) encourage the application of uniform prin- 11 ciples and standards at each FSIO; and 12 (5) hold public field hearings 4 times a year to 13 informally provide— 14 (A) information and advice to the public 15 and covered persons; and 16 (B) a forum to gather information from 17 the public and covered persons. 18 (d) MEETINGS.—The FSIO Liaison Committee shall 19 meet at least twice a year. 20 (e) CHAIR.— 21 (1) ESTABLISHMENT.—The first Chair of the 22 FSIO Liaison Committee shall be elected by the 23 members. The Chair shall serve for a term of 2 24 VerDate Sep 11 2014 20:30 Oct 25, 2019 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4767.IH H4767 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 4767 IH years and thereafter the chairmanship shall rotate 1 among the members of the committee. 2 (2) POWERS OF THE CHAIR.—The Chair is au- 3 thorized to carry out the internal administration of 4 the FSIO Liaison Committee, including the appoint- 5 ment and supervision of employees and the distribu- 6 tion of tasks among members, employees, and ad- 7 ministrative units. 8 (f) TESTIMONY.—Not later than 6 months after the 9 date of the enactment of this Act, the Chair of the FSIO 10 Liaison Committee shall present testimony to Congress on 11 the activities of the FSIO Liaison Committee. 12 (g) FUNDING.— 13 (1) COMPENSATION OF MEMBERS.—Each mem- 14 ber of the FSIO Liaison Committee shall serve with- 15 out additional compensation but shall be entitled to 16 reasonable expenses incurred in carrying out official 17 duties as such a member. 18 (2) GENERAL EXPENSES.—The costs and ex- 19 penses of the FSIO Liaison Committee, including 20 the salaries of employees, shall be split equally be- 21 tween, and paid by, each agency other than an agen- 22 cy that has eliminated the agency’s FSIO pursuant 23 to section 4(g). 24 VerDate Sep 11 2014 20:30 Oct 25, 2019 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4767.IH H4767 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 4767 IH SEC. 6. PETITION TO AGENCY. 1 (a) IN GENERAL.—A covered person may submit a 2 petition to an agency, through the agency’s FSIO, in such 3 form and in such manner as the agency’s FSIO may re- 4 quire, to request to enter into an enforceable compliance 5 agreement containing a modification or waiver of an agen- 6 cy regulation or Federal statutory requirement under 7 which the agency has supervisory or rulemaking authority 8 with respect to the covered person or a financial innova- 9 tion the covered person offers or intends to offer. 10 (b) CONTENTS.—In a petition submitted under this 11 section, the covered person shall— 12 (1) submit an alternative compliance strategy 13 that proposes a method to comply with the agency 14 regulation or Federal statutory requirement; and 15 (2) demonstrate that under the alternative com- 16 pliance strategy, the financial innovation— 17 (A) would serve the public interest; 18 (B) improves access to financial products 19 or services; and 20 (C) does not present systemic risk to the 21 United States financial system and promotes 22 consumer protection. 23 (c) MULTIPARTY PETITIONS.—One or more covered 24 persons that offer or intend to offer similar financial inno- 25 vations may jointly submit a petition under this section. 26 VerDate Sep 11 2014 20:30 Oct 25, 2019 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H4767.IH H4767 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 4767 IH (d) SAFE HARBOR.— 1 (1) IN GENERAL.—During the period after a 2 covered person submits a petition under this section 3 and before the agency receiving the petition makes 4 a determination on the petition pursuant to section 5 7, an agency may not take an enforcement action 6 against a covered person relating to the financial in- 7 novation that was the subject of the petition. 8 (2) INJUNCTIVE RELIEF.—If an agency deter- 9 mines that a financial innovation described under 10 paragraph (1) presents an immediate danger to con- 11 sumers or presents systemic risk to the United 12 States financial system, the agency may apply to a 13 court of competent jurisdiction for injunction to pro- 14 hibit a covered person from offering such financial 15 innovation during the period described in paragraph 16 (1). 17 (e) NOTICE AND COMMENT.— 18 (1) IN GENERAL.—Not later than 30 days after 19 receiving a petition, the agency that receives the pe- 20 tition shall publish the petition in the Federal Reg- 21 ister and provide a 60-day period for public notice 22 and comment. 23 (2) EXCEPTION FOR NOTICE AND COMMENT PE- 24 RIOD.—The agency that receives the petition may 25 VerDate Sep 11 2014 20:30 Oct 25, 2019 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4767.IH H4767 pamtmann on DSKBC07HB2PROD with BILLS 11 •HR 4767 IH waive the notice and comment period described in 1 paragraph (1) if such agency determines that the 2 covered person submitting the petition is similarly 3 situated to another covered person that has been 4 granted approval of a petition pursuant to section 7. 5 (3) CONFIDENTIALITY.—The agency shall 6 maintain the confidentiality of any nonpublicly avail- 7 able data or information in any petition submitted 8 under this section. The agency shall give reasonable 9 consideration to maintaining the confidentiality of 10 data or information identified by the covered person 11 in the petition submitting under this section as non- 12 publicly available data or information. 13 SEC. 7. AGENCY DETERMINATION OF PETITION. 14 (a) IN GENERAL.—Not later than 30 days after the 15 end of the comment period described under section 6, or 16 if the comment period was waived, not later than 60 days 17 after receipt of a petition under section 6, the head of the 18 agency receiving the petition shall complete a review of 19 the petition and notify the covered person, in writing, of 20 the agency’s determination of the petition. 21 (b) APPROVAL.—If the covered person submitting the 22 petition shows that it is more likely than not that the cov- 23 ered person meets the requirements for establishing an al- 24 ternative compliance strategy, the agency shall— 25 VerDate Sep 11 2014 20:30 Oct 25, 2019 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H4767.IH H4767 pamtmann on DSKBC07HB2PROD with BILLS 12 •HR 4767 IH (1) approve th [Text truncated for display. Full text available on Congress.gov.]