SECTION 1. Chapter 167 of the General Laws, as appearing in the 2014 Official Edition, is hereby amended by inserting after section 51 the following section:-
Section 52. (a) As used in this section, the following words shall, unless the context clearly requires otherwise, have the following meanings:
“Agency regulation”, a regulation, as defined in section 1 of chapter 30A, issued by a covered agency, guidance issued by a covered agency, or a published proposed or interim rule, policy statement, directive, adjudication, or interpretation of a covered agency.
“Covered agency”, each of the division of banks, the division of insurance, and the securities division.
“Covered person”, a person that offers or intends to offer a financial innovation.
“Enforceable compliance agreement”, a contractual agreement described under subsection (i).
“Financial innovation”, an innovative financial service or product, the delivery of which is enabled by technology, that is or may be subject to a covered agency’s regulation or state statute.
“Financial services innovation office” or “FSIO”, the office established pursuant to subsection (b).
“FSIO Committee”, the committee established pursuant to subsection (e).
(b) There shall be a financial services innovation office within the office of consumer affairs and business regulation to promote financial innovations. The undersecretary for the office of consumer affairs and business regulation shall appoint an individual to serve as the director of the FSIO. In general, the FSIO shall: (1) support the development of financial innovations; and (2) assist covered persons in complying with the requirements of state regulators regarding their financial innovations.
(c) Not later than 90 days after the establishment of the FSIO, each covered agency shall modify any offices or programs at the covered agency that promote financial innovations or assist covered persons in developing financial innovations to operate within the FSIO. Any legal action or proceeding commenced by or against such office or program of a covered agency, including no-action letters and staff advisory opinions, shall be transferred to the FSIO.
(d) Not later than 1 year after the date of the enactment of this act, and annually thereafter, the FSIO shall submit a report to the legislature on the activities of the FSIO, which shall include: (1) a description of the petitions considered; (2) the rationale for acceptance or rejection of petitions; (3) the efforts of the FSIO to encourage financial innovations; (4) the number and characteristics of the agreements; (5) the most innovative and least burdensome tools that the agency’s FSIO has implemented for achieving regulatory ends; (6) strategies implemented to coordinate and facilitate interagency cooperation among covered agencies; (7) the existing state laws, regulations, or practices (including guidance materials, examinations, and enforcement proceedings and settlements) that the FSIO identifies as the most unnecessarily burdensome to innovation in developing or providing financial products and services or the most unnecessarily burdensome to competition in the financial services industry; and (8) an identification of the overlap or fragmentation of regulation of financial products or services and recommendations for reducing, consolidating, or eliminating such overlap or fragmentation.
(e) Not later than 60 days after the date of the enactment of this Act, the FSIO shall establish a committee to be known as the FSIO Committee, to be composed of the director of each covered agency or a designee. The FSIO Committee shall meet at least twice a year. Each member of the FSIO Committee shall serve without additional compensation but shall be entitled to reasonable expenses incurred in carrying out official duties as such a member. The FSIO Committee shall: (1) consult on the administration, coordination, and oversight of the FSIO; (2) facilitate the cooperation of each covered agency to ensure that they share information and data; (3) monitor regulatory proposals and developments related to financial innovations; (4) encourage the application of uniform principles and standards at each covered agency; and (5) hold a public field hearing at least once a year to informally provide: (i) information and advice to the public and covered persons; and (ii) a forum to gather information from the public and covered persons.
(f) A covered person may submit a petition to the FSIO, in such form and in such manner as the FSIO may require, to request to enter into an enforceable compliance agreement containing a modification or waiver of a covered agency regulation or state statutory requirement under which a covered agency has supervisory or rulemaking authority with respect to the covered person or a financial innovation the covered person offers or intends to offer. In a petition submitted under this section, the covered person shall: (1) submit an alternative compliance strategy that proposes a method to comply with the covered agency’s regulation or state statutory requirement; and (2) demonstrate that under the alternative compliance strategy, the financial innovation:(i) would serve the public interest; (ii) improves access to financial products or services; and (iii) does not present systemic risk to the state financial system and promotes consumer protection.
One or more covered persons that offer or intend to offer similar financial innovations may jointly submit a petition under this section. The FSIO shall maintain the confidentiality of any nonpublicly available data or information in any petition submitted under this section. The FSIO shall give reasonable consideration to maintaining the confidentiality of data or information identified by the covered person in the petition submitting under this section as nonpublicly available data or information.
Not later than 30 days after receiving a petition, the FSIO shall publish the petition and provide a 60-day period for public notice and comment, provided, however, that the FSIO may waive the notice and comment if it determines that the covered person submitting the petition is similarly situated to another covered person that has been granted approval of a petition pursuant to this section. Not later than 30 days after the end of the comment period, or if the comment period was waived, not later than 60 days after receipt of a petition, the FSIO shall complete a review of the petition and notify the covered person, in writing, of the FSIO’s determination of the petition.
(g) If the covered person submitting the petition shows that the covered person meets the requirements for establishing an alternative compliance strategy, the FSIO shall: (1) approve the petition; and (2) enter into an enforceable compliance agreement with the covered person in accordance with the requirements of subsection (i).
(h) If the FSIO rejects a petition, the FSIO shall provide the covered person with a written notice explaining the reason for rejecting the petition, including: (1) evidence that the covered person did not satisfy the requirements for establishing an alternative compliance strategy; and (2) an identification of the rules or regulations of the covered agencies applicable to the covered person with respect to the financial innovation. Not later than 90 days after receiving a notice of disapproval, a covered person may revise and resubmit a petition to the FSIO under subsection (f). A covered person may not seek judicial review of the FSIO’s determination on a petition in accordance with section 14 of chapter 30A.
(i) If the FSIO approves a petition under subsection (g), the covered person may enter into an enforceable compliance agreement with the FSIO, which shall include the terms under which the covered person may develop or offer the approved financial innovation to the public and any requirements of the covered person and any covered agency with respect to the financial innovation. The FSIO shall establish requirements relating to enforceable compliance agreements that include: (1) procedures for modifying the terms of the agreement; (2) consequences for failure to comply with the terms of the agreement; (3) a compliance examination process that: (i) solicits feedback from covered agencies on the agreement; and (ii) occurs not less frequently than annually; (4) a termination date for the agreement that is at least 1 year after the date on which the agreement is entered into; (5) procedures for extending the termination date; (6) procedures for judicial review of another agency’s challenge to the agreement in accordance with section 14 of chapter 30A; and (7) procedures for maintaining the confidentiality of any information disclosed to the FSIO or a covered agency in making the agreement. If a covered person and the FSIO enter into an enforceable compliance agreement, then another covered agency may not commence an enforcement action against the covered person with respect to the financial innovation that is the subject of the enforceable compliance agreement.
(j) The costs of carrying out the requirements of this section shall be split equally between, and paid by, each covered agency.
The information contained in this website is for general information purposes only. The General Court provides this information as a public service and while we endeavor to keep the data accurate and current to the best of our ability, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.