In the report, the NYDFS makes the recommendation that online lenders face the same regulations as traditional financial institutions.
“All New York lenders should operate under the same set of rules and be subject to consistent enforcement of those rules to achieve a level playing field for all market participants, which is the underlying principle of free markets and competition,” the department wrote in a release.
To address this concern, the report says that the laws relating to transparency in pricing, fair lending, fair debt collection practices, and data protection must apply to all consumer and small business lending.
The NYDFS says that the current situation, where many online lenders remain unlicensed in New York with no direct supervisory oversight from a safety and soundness or consumer compliance perspective, is unacceptable, and the Department is calling for direct supervision, with regular examinations.