The American Fintech Council (AFC) has formally requested the Federal Deposit Insurance Corporation (FDIC) to reconsider its Proposed Rule on Recordkeeping for Custodial Accounts. The AFC, representing fintech companies and innovative banks, submitted a comment letter opposing the proposal, which they describe as "ill-conceived" and potentially harmful to consumers and innovation.
Phil Goldfeder, Chief Executive Officer of AFC, stated that while the organization agrees with the principles behind the rule, it is a reaction to an isolated event rather than addressing systemic issues. He expressed concern that this could lead to an overly prescriptive regulatory environment that might undermine confidence in financial services. "The Proposed Rule fails to reflect the hallmarks of sound policymaking," Goldfeder said. He urged the FDIC to collaborate with industry stakeholders for more effective outcomes.
The AFC's letter highlights several concerns about the Proposed Rule, including its reliance on insufficient data and its reactive nature. The council warned that it could impose unnecessary burdens on financial institutions and make custodial accounts expensive for underserved consumers who depend on these services.
Ian P. Moloney, SVP and Head of Policy and Regulatory Affairs at AFC, criticized the timing of the rule. He noted that existing industry efforts already address many issues covered by the proposal and pointed out significant limitations in FDIC's data analysis. "Pragmatic policymaking should address market-wide issues with input from stakeholders—not impose a blanket response to a single failure," Moloney stated.
The AFC recommends withdrawing the Proposed Rule and engaging with industry leaders to enhance best practices within existing regulatory frameworks. They believe collaboration can foster responsible innovation while ensuring transparency in custodial account recordkeeping.
As a standards-based organization, AFC represents major fintech companies and banks offering embedded finance solutions. Their mission is to promote a transparent financial system through responsible innovation in financial services.