Office of the Comptroller of the Currency Proposal to Charter Special Purpose National Banks for FinTech Companies

OCC Outlines Supervisory Expectations and Seeks Public Comment Sullivan & Cromwell LLP - December 4, 2016

On December 2, 2016, Thomas J. Curry, Comptroller of the Currency, announced that the Office of the Comptroller of the Currency (OCC) would move forward with its plan to charter special purpose national banks for financial technology (FinTech) companies. The OCC is the regulator and chartering authority for national banks and federal savings associations.  According to Comptroller Curry, the OCC has decided to make special purpose national bank charters available to FinTech companies because doing so is in the public interest due to FinTech’s “great potential to expand financial inclusion, empower consumers, and help families and businesses take more control of their financial matters.”  Comptroller Curry also announced that the OCC will establish a clear process, criteria and standards for FinTech companies to receive special purpose national bank charters.  These standards will address, among other things, appropriate risk management, consumer protection and capital and liquidity. 

The OCC’s announcement, which immediately drew a challenge from the New York State Department of Financial Services (NYSDFS), is likely to raise a number of issues. Among the principal issues will be (i) the actual willingness of the OCC to charter these new institutions, as the OCC has granted only one national bank charter in the last six years; (ii) whether FinTech companies will be able to satisfy the OCC’s supervisory expectations as a practical matter; (iii) whether the special purpose charter will provide enough benefit to FinTech companies to justify becoming subject to what is likely to be an intrusive and substantial federal regulatory regime; and (iv) the overall impact on consumers.