CFPB Deputy Director Tells Consumer Group Meeting Bank-Fintech Partnerships May Be Scrutinized

In keynote remarks before the Consumer Federation of America’s 2022 Consumer Assembly last week, Consumer Financial Protection Bureau (CFPB) Deputy Director Zixta Martinez said that the Bureau would be scrutinizing partnerships between banks and fintech companies.

“One specific area of interest is understanding how the small dollar credit market is evolving,” Martinez said in her remarks. “Over the last several years, we’ve seen a rise in installment and lines of credit lending, including by lenders who also make payday loans. A number of installment lenders are engaged in relationships with banks. Some lenders attempt to use these relationships to evade state interest rate caps and licensing laws by making claims that the bank, rather than the non-bank, is the lender.”

Martinez added that many of those in attendance “have raised concerns about the rise of these ‘rent-a-bank’ schemes in the installment space. I want to assure you: CFPB hears you, we share your concerns, and we are taking a close look at the issue.”

Groups representing the lenders claim that the partnerships “help broaden access to credit for consumers who are often shut out by traditional lenders.”

In February, as FDIC Chair Jelena McWilliams prepared to step down, consumer groups sent a letter to the incoming leadership calling for the banking regulator to take action on the partnerships.

Other topics covered in Martinez’ speech include payday loans and extended payment plans, overdraft and other banking fees, and medical debt and credit reporting.