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CNBC: Senators call on SEC and other watchdogs to look into FinTech regulation after Robinhood debacle
Dec 20 2018
Senators call on SEC and other watchdogs to look into FinTech regulation after Robinhood debacle
December 20, 2018
Robinhood’s botched attempt to launch checking and savings accounts did not go over well with lawmakers.
In a letter to regulators Thursday, U.S. senators said they were “concerned” that Robinhood and other fintech companies may be dodging regulatory scrutiny. They asked U.S. financial watchdogs how they plan to police start-ups that are moving into banks’ territory.
Seven U.S. senators sent a letter to Securities and Exchange Commission Chairman Jay Clayton and the heads of the Securities Investor Protection Corporation and the Federal Deposit Insurance Corp. on Thursday with a list of concerns about Robinhood’s products.
“We would appreciate an update on how the SEC, FDIC, and SIPC carefully monitor fintechs who, intentionally or not, blur financial products for competitive advantage,” the senators wrote in the letter. “Robust competition should not come at the expense of customer clarity and every effort should be made not to mislead customers.”
Senators said the letter was in direct response to Robinhood’s announcement of new checking and savings accounts, which advertised an eye-popping and industry-leading 3 percent interest rate. About 850,000 people signed up to its waiting list for the new products, according to the letter.
Just a day after making its announcement, Menlo Park, California-based Robinhood said it would re-brand and re-launch the product. Robinhood’s founders acknowledged that its plan, which aimed to offer no-fee accounts with no minimums, ATM fees, penalty charges or foreign transaction fees, “may have caused some confusion.”
But senators are still wary.
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