Late last month the U.S. Department of the Treasury’s Office of the Comptroller of the Currency (OCC) issued a bulletin updating risk management procedures for financial institutions working with 3rd parties by adding marketplace lenders. “Marketplace lender” is defined broadly in the bulletin and includes all companies involved in online lending, except payday lending.
The bulletin supplements a 2013 bulletin describing methodologies for assigning and monitoring risk, accountability standards for responsible bank employees and a review process for online activity. The Federal Deposit Insurance Corporation issued similar expectations in 2015. Banks are increasingly teaming up with online lenders to expand into untapped financial markets that traditional banks often struggle penetrating. The FDIC and OCC rules will help mitigate bank risk and ensure partnerships with online lenders clearly define accountability between partners.