Regulators Are Harming UK as a Financial Center, Lawmakers Warn
The House of Lords Financial Services Regulation Committee said officials need the clip the wings of the Financial Ombudsman Service, whose awards for motor finance claims have been so large foreign firms fear there is a 'regulatory penalty attached to investing in the UK.'
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Yahoo
2 hours ago
- Yahoo
CFPB moves to hold Synapse accountable for missing customer funds
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. The Consumer Financial Protection Bureau is preparing to file an adversary proceeding complaint against now-bankrupt Synapse Financial Technologies, alleging unfair acts or practices and failure to maintain adequate records of consumer funds. Since a June 27 hearing, Synapse's Chapter 11 trustee, former Federal Deposit Insurance Corp. Chair Jelena McWilliams, and her team have been meeting with the CFPB, responding to queries and providing the requested data and records to support the bureau's investigation, she said in an update filed Thursday. 'Specifically, the Bureau plans to allege that Synapse failed to maintain adequate records of the location of consumers' funds and failed to ensure those records matched the records maintained by the partner banks, causing consumers to lose access to their funds, an estimated $60-90 million of which still have not been recovered,' McWilliams wrote Thursday. The court document noted that McWilliams and the CFPB are negotiating a proposed stipulated final judgment that would include 'nominal monetary penalties,' which they'll seek a judge's approval of. The CFPB has indicated that continuing the case — in either Chapter 11 or Chapter 7 bankruptcy filing – would expedite its investigation and judgment process, compared to dismissal of the case. In June, the CFPB filed a statement of interest that supported converting the case to Chapter 7 rather than dismissing it, as it would better serve consumers who haven't been fully compensated. The bureau claimed that hundreds of consumers, who were end users of the fintech platforms that used Synapse's systems, have filed complaints with the CFPB, saying their accounts were frozen and they have received only a fraction of their funds. 'The Bureau has a strong interest in pursuing its claim because it has a mechanism to potentially make victims whole without payment from Debtor's estate,' the CFPB said in the June court document. After a final judgment, the CFPB's subsequent work – including potentially accessing its civil penalty fund to compensate affected users – would not depend on an active bankruptcy case, McWilliams noted in her latest statement. A hearing on the conversion motion is scheduled for Monday. According to the CFPB, since 2010, $3.3 billion in CPF payments have been made to eligible consumers, while $3.7 billion has been collected into the fund. As of Sep. 30, 2024, the CPF had an unallocated balance of $118.9 million in funds that have been collected and are not allocated for administrative purposes. When middleware provider Synapse filed for bankruptcy in April 2024, more than 100,000 consumers' funds were frozen, cutting off access to around $265 million in deposits. To date, many consumers still wait to be made whole since Synapse, Evolve Bank and fintechs involved did not maintain accurate ledgers tracking who the money belonged to and where it was held, which led to 'gross mismanagement' of funds. Synapse partnered with fintech companies like Yotta, Juno, Mercury and Copper and insured banks like Evolve, Lineage Bank, American Bank and AMG National Trust. The middleware fintech helped manage the transfer of funds and the maintenance of records between the fintech apps and the banks where those funds would be ultimately stored. In June, GlassRatner Advisory Services facilitated Evolve's access to data stored in Synapse's Amazon Web Services environment, according to a court document.. On July 31, Evolve's counsel informed McWilliams that Ankura and Evolve had finished the data copying process and a complete copy of Synapse's AWS data was stored in an Evolve-controlled AWS environment. Ankura is an independent third-party expert, providing accounting and data analysis services to help Evolve navigate the complex situation stemming from the Synapse bankruptcy. On Wednesday, Evolve filed a stipulation establishing an agreement between McWilliams and the bank and providing for Evolve's continued maintenance of Synapse's AWS data beyond the final disposition of the case. Evolve declined to comment. Recommended Reading Wells Fargo expects 'significant increase' in risk-weighted assets Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Forbes
3 hours ago
- Forbes
Surprising Ways The GENIUS Act Will Impact Financial Services
For years, stablecoins, digital tokens pegged to a fiat currency, operated in a patchwork of state laws, informal guidance, and regulation by enforcement. The GENIUS Act replaces that uncertainty with a comprehensive federal framework aimed squarely at 'payment stablecoins,' tokens designed for payments rather than speculation. For financial services firms, this is not simply another compliance exercise. The Act reshapes the competitive landscape, creates new classes of regulated entities, and forges a direct link between digital assets and the core of the U.S. financial system. It also introduces significant strategic choices and risks for banks, fintechs, and investors. A New Regulatory Architecture The Act defines a payment stablecoin as a digital asset used for payment or settlement that issuers must redeem for a fixed amount of money. Importantly, compliant payment stablecoins are not considered securities or commodities, removing them from SEC and CFTC jurisdiction and placing them under the supervision of federal banking regulators such as the OCC, Federal Reserve, and FDIC. There are three legal pathways to issue these tokens: Bank subsidiaries: Insured depository institutions can create subsidiaries dedicated to stablecoin issuance. Federal qualified issuers: Non-banks, uninsured national banks, and federal branches of foreign banks can apply for a new OCC-administered charter. State qualified issuers: State-chartered entities can issue stablecoins if their home state's regime is certified as meeting federal standards, but generally only if their issuance stays under $10 billion. All permitted issuers must meet strict prudential requirements, including 1:1 reserve backing with high-quality liquid assets such as cash or short-term Treasuries, monthly audited disclosures, and full Bank Secrecy Act compliance. They are prohibited from rehypothecating reserves and from paying any interest or yield to holders. The Most Contested Provisions Dual State Federal Framework The Act's 'dual track' system, allowing both state and federal charters, is designed to preserve state innovation while enforcing consistent federal standards. Critics warn it could encourage regulatory arbitrage, with issuers shopping for the most lenient oversight. The $10 billion cap for state-chartered issuers creates a growth ceiling that may push successful projects toward federal supervision, potentially marginalizing state regulators over time. Reserve Requirements and Systemic Risk The 1:1 reserve mandate directly responds to past stablecoin failures, such as the 2022 collapse of the algorithmic Terra/Luna project and longstanding concerns about opaque reserves in other major issuers. By requiring reserves to be held entirely in cash or short-term U.S. Treasuries, the Act aims to eliminate credit and liquidity risks at the issuer level. However, concentrating reserves in Treasuries also creates a potential systemic vulnerability. If a major stablecoin suffered a crisis of confidence, large-scale redemptions could trigger a rapid sale of government debt, disrupting Treasury market liquidity and spiking short-term interest rates. The largest issuers could become systemically important not for their liabilities but for the sheer volume of U.S. government securities they hold. In such a scenario, federal intervention to stabilize the market would be almost inevitable. The Consumer Protection Paradox Proponents highlight the Act's solvency safeguards, restrictions on misleading marketing, and unprecedented bankruptcy priority for stablecoin holders. Critics point out what is missing. There is no federal insurance comparable to FDIC coverage for bank deposits. Redemption timelines are not guaranteed, leaving room for issuers to delay payouts in a crisis. And key consumer finance laws, such as the Electronic Fund Transfer Act, are not explicitly applied. This creates a gap between what consumers may assume they are buying and the legal protections they actually receive. The Overlooked Provisions Several less discussed provisions have potentially far reaching implications for the industry. Bankruptcy 'Super Priority' The Act grants stablecoin holders a claim ahead of all other creditors, including secured lenders and the administrative costs of bankruptcy proceedings. While intended as a strong safeguard for consumers, it may make orderly wind downs impossible. Without funds to pay trustees, lawyers, and other professionals, bankrupt issuers could remain in limbo, trapping assets and delaying recovery for everyone. Prohibition on Interest Issuers cannot pay yield of any kind to stablecoin holders. This measure protects the traditional banking sector from losing low cost deposits to technologically superior digital alternatives. Without the ability to offer returns, issuers must generate revenue from transaction fees or other services. This restriction reflects the most significant concession to incumbent banks and prevents the development of stablecoins as a competitive savings product. Interoperability Gaps The Act does not mandate technical standards to ensure stablecoins from different issuers can interact seamlessly. In the absence of rules, major financial institutions may build proprietary networks that limit transferability. This could lead to a fragmented 'digital dollar' environment, undermining the efficiency gains blockchain payments are supposed to deliver. Strategic Implications for Financial Services The GENIUS Act sets the stage for a competitive race among banks, fintechs, and crypto-native firms. For banks and credit unions, the risks of deposit disintermediation are tempered by opportunities to issue proprietary stablecoins, act as custodians for reserve assets, and hold large cash positions on behalf of non-bank issuers. These roles could create significant new fee and deposit revenue streams, provided institutions invest in the infrastructure and partnerships needed to compete. For fintechs and crypto-native firms, the new OCC charter offers long sought federal legitimacy and nationwide reach. The tradeoff is bank grade compliance requirements that demand significant investment in AML programs, risk management, and cybersecurity. Smaller players may find the bar too high, accelerating industry consolidation. For asset managers, the reserve requirements create a new, structural source of demand for short-term government securities and money market products. Firms that can manage large, transparent, on chain portfolios for stablecoin issuers will find themselves in a growing and lucrative niche. The GENIUS Act is not the final word on stablecoin regulation. Federal agencies must still write detailed rules for capital, liquidity, and operational resilience. The unresolved question of interoperability will shape whether the United States develops an open, competitive payments ecosystem or a few closed networks dominated by the largest financial institutions. Financial services leaders should treat the Act as both a compliance mandate and a strategic inflection point. The firms that adapt quickly, invest in the right capabilities, and position themselves to benefit from the new structure will have an advantage as digital dollars move from the periphery of finance into the mainstream. For more like this on Forbes, check out What Is Agentic AI And What Will It Mean For Financial Services? and The Data Centers Powering AI Boom In Financial Services.
Yahoo
3 hours ago
- Yahoo
Vontier (VNT) Stock Trades Up, Here Is Why
What Happened? Shares of electronic equipment provider Vontier (NYSE:VNT) jumped 3.3% in the afternoon session after its subsidiary Teletrac Navman announced it is deploying next-generation AI-enabled Smart Dashcams to boost safety for the Canal & River Trust's fleet. The deployment of these AI-enabled Smart Dashcams is for the Canal & River Trust, a charity responsible for managing waterways in England and Wales. This initiative is designed to enhance safety and driver wellbeing through investments in new technology. The news builds on recent positive momentum for the company, which reported strong second-quarter results in late July, beating analyst estimates and raising its full-year earnings guidance. This solid performance prompted several analysts to upgrade the stock or raise their price targets in early August, contributing to a consensus "Moderate Buy" rating from Wall Street, signaling growing confidence in Vontier's business trajectory. After the initial pop the shares cooled down to $41.82, up 3.6% from previous close. Is now the time to buy Vontier? Access our full analysis report here, it's free. What Is The Market Telling Us Vontier's shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today's move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business. Vontier is up 16% since the beginning of the year, and at $41.82 per share, has set a new 52-week high. Investors who bought $1,000 worth of Vontier's shares at the IPO in September 2020 would now be looking at an investment worth $1,230. Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we've identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link. Sign in to access your portfolio
