VA: Testimony in Opposition to Senate Bill 1252

TO: Virginia Senate Committee on Commerce and Labor
FROM: Ian P. Moloney, SVP- Head of Policy and Regulatory Affairs, American Fintech Council (AFC)
DATE: January 27, 2025
SUBJECT: Senate Bill 1252

Position: Oppose.

Testimony:

Thank you, Chairman Deeds and members of the Senate Committee on Commerce and Labor for providing me the opportunity to testify before you in opposition to Senate Bill 1252 (SB 1252). My name is Ian Moloney, I am the Senior Vice President, Head of Policy and Regulatory Affairs at the American Fintech Council (AFC). I reside in Washington, D.C. and am a recognized subject matter expert on the issues covered within SB 1252.

AFC is a standards-based organization and the premier trade association representing the largest financial technology (Fintech) companies and innovative banks. Our mission is to promote a transparent, inclusive, and customer-centric financial system by supporting responsible innovation in financial services and encouraging sound public policy. AFC members foster competition in consumer finance and pioneer products to better serve underserved consumer segments and geographies.

AFC represents responsible fintech lending companies of all sizes as well as their innovative partner banks and we recognize that not all bank-fintech partnerships are created equal. We also believe that clarity in policy and regulation is key for responsible providers to offer their products responsibly and provide the consumers the protection they want and need. Unfortunately, SB 1252 in its current form creates a confusing policy structure for responsible fintech companies seeking to offer loans in the state through bank-fintech partnerships. In turn, SB 1252 could ultimately limit Virginians’ access to responsible credit and curtail responsible innovators from operating in the state.

Responsible fintech companies partnering with regulated financial institutions have created safe, transparent, and affordable credit options for families long forgotten by traditional financial institutions. Our members have committed to advocating for a regulatory gold standard that offers access to credit without compromising consumer protection or regulatory compliance. The banks originate these loans and are fully responsible for compliance with all applicable rules and regulations expected of a bank. This model democratizes financial services, creates competition in the market and most importantly provides clarity for the fintech company, the bank and especially the consumer. Safe and responsible innovative fintech platforms can expand access for communities and small businesses that have been traditionally underserved. AFC supports a fair financial services system where products are designed in compliance with regulation and where predatory conduct has no place.

AFC believes that the goal of lending through responsible bank-fintech partnerships is to ensure sustainable access to credit. That goal should be present in all lending and servicing components, so that innovation can be a driver of fair and responsible access to credit. Unfortunately, SB1252 does not help responsible innovators meet this goal.

I thank you again for the opportunity to offer my opposition to this bill and am happy to answer any questions you may have.

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