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FinTechs belonging to this category act as a loan creditor (even short and very short-term loans), are broking loans or receivables or conduct factoring of loans, which were given to private or business customers. In this business area you also find “peer-to-peer” (P2P) services, in which FinTechs enable a multitude of users to give loans (and brokered by the FinTech-platform) to other users or companies.
Finetrading is hereby a financial service of FinTechs, where they buy due receivables and grant the debtor an extension of payment time.
As an ancillary service some FinTechs offer alternative credit assessment services to check the solvency of a borrower.
Introduction
Attitude of the country towards loan-giving-, factoring-, brokerage-, finetrading- and ancillary services
For the most part factoring and loans in a commercial setting is not regulated in the United States. The United States make a strong differentiation between securities which are regulated by the SEC and may only be sold if registered or exempt and other loans or crypto currencies that are not securities. All equities and generally any fractionised interest is a security. FinTech platforms that facilitate the trading of securities generally would need to be regulated as broker-dealers. See “Financial advisory and brokerage services, including robo-advisory and auto-trading.”
Most loan products (other than debt securities) are not considered to be a security and thus are not regulated by the SEC. As such, the market for corporate loans, factoring and brokerage of such products is for the most part unregulated when they are not issued by a bank. Banks are subject to several regulations, including truth in lending laws under OCC jurisdiction.
Peer-to-peer loans generally are considered to be debt securities and thus these platforms typically are regulated, and the making of these loans often is registered under the Securities Act.
Online mortgage brokerage, consumer loan brokerage and auto loan financing have exploded in popularity in recent years. Applications and websites that facilitate finding the least expensive loan alternatives have also proliferated.
For products dealing with consumers, the CFPB is responsible for consumer protection in the financial sector. The CFPB has jurisdiction over banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, debt collectors, and other financial companies operating in the United States and dealing directly with consumers. The FTC is also responsible for oversight of a number of regulations that may affect consumer-facing non-bank lenders.
Receivables trading may or may not be regulated, depending on how they are structured and the nature of the underlying assets. For example, repurchase agreements or “repos” could be regulated as securities, commodity interests or not at all, depending on the nature of the underlying assets.
Legal affairs
Obligations and requirements to provide loan-giving-, factoring-, brokerage-, finetrading, and ancillary services described above
As mentioned above, for non-consumer facing products and services the market is generally not regulated in the United States. Many loan-making and factoring companies, however, are members of non-governmental industry originations and provide standards and/or form documents. The consumer-facing market may be subject to regulations that frequently relate to customer disclosures.
Additional comments regarding the legal situation for loan-giving-, factoring-, brokerage, finetrading-, and ancillary services or what FinTech’s must be aware of in this business area
Given the litigious nature of United States regulatory agencies as well as the cost of ligation and the gen