International Law and Immigration
What’s New at California’s DFPI: the Office of Financial Technology Innovation
By Christina Tetreault
I. WHAT IS THE DFPI?
The Department of Financial Protection and Innovation (DFPI), formerly the Department of Business Oversight, protects consumers and fosters trust by regulating companies and individuals offering financial products. The DFPI was created by the California Consumer Financial Law (CCFPL), which provided authority and resources to expand the Department’s oversight to better protect consumers, keep up with emerging financial innovation, and spur responsible job growth. The law was enacted in Assembly Bill 1864, which was authored by Assemblywoman Monique Limón, D-Santa Barbara, and was signed by Governor Gavin Newsom in September 2020. The first implementation funds were released in October 2020. The CCFPL enables the DFPI to stop predatory business practices, spur responsible innovation by clarifying regulatory expectations for emerging financial products and services, oversee financial activity previously unregulated by the Department, keep up with emerging financial trends, and increase public outreach and education to vulnerable populations. The law created a new Consumer Financial Protection Division, Office of Financial Technology Innovation, and an Office of the Ombuds. The new Consumer Financial Protection Division now has the authority to supervise and register financial service providers previously unregulated by the DFPI and includes a market monitoring and research arm to keep up with consumer trends.
II. OFFICE OF FINANCIAL TECHNOLOGY INNOVATION
a. Focus on Engagement, Education and Coordination
I came to the DFPI in May of 2021 to stand up the Office of Financial Technology Innovation after working for Consumer Reports in financial policy. The Office’s mission is to support responsible innovation and job creation and retention in California. One key component of developing the office is feedback and study. Before coming to the DFPI, I studied and met with a number of people running innovation offices in other jurisdictions and at federal agencies. I learned their lessons and have sought to include the best practices. I also sought internal feedback, working to understand how OFTI could support established programs and the new Consumer Financial Protection division. The result of these conversations led me to focus the office on engagement, education and coordination.
b. Serving External Stakeholders
For external stakeholders, the value proposition of OFTI is twofold: it’s a place to get matched with DFPI resources, and it’s a place to share your story, thoughts and input. We seek to help innovators, entrepreneurs, lawyers, and anyone interested in supporting responsible innovation understand DFPI expectations. The Office does not provide legal advice. We also welcome conversations with academics, advocates and others to better understand stakeholder perspectives on what constitutes responsible innovation in financial services.
c. Serving Internal Stakeholders
OFTI serves internal stakeholders at the DFPI by helping to increase staff understanding of emerging products and services. We hold internal “Innovation Conversations” with external experts to illuminate tech trends in financial services, identify new ways technology is being deployed by companies to ensure compliance, or/and how technology is increasing beneficial access to consumer financial products and services. Additionally, OFTI helps coordinate DFPI’s approach to emerging products and services.
d. Support Staff
OFTI is small but mighty, comprised of four staff. Analyst Belinda Alcala supports the operations and research parts of the Office. Eva Mireku is the dedicated researcher for OFTI and also supports the Markets team in the DFPI’s Consumer Financial Protection Division. Eva’s research at OFTI is future-focused, seeking to understand what’s coming in technology and finance. Adam Wright is senior attorney for the Office. While the OFTI does not give legal advice, Adam is instrumental in helping DFPI situate emerging products and services within the legal authorities of the Department. As noted above, I serve as Deputy Commissioner for the Office of Financial Technology Innovation and am responsible for strategy and tactics in fulfilling our mission.
e. Stakeholder Events
In the nearly year and a half since OFTI opened its doors, we have also been busy helping others understand DFPI’s expanded authorities and the new Office of Financial Technology innovation. To that end, OFTI staff held or were featured at dozens of events, virtual and in person, with industry stakeholders.
We are also active with other state and federal financial regulatory groups, including the American Consumer Financial Innovation Network (ACFIN), a network of federal and state officials and regulators seeking to facilitate consumer-beneficial innovation through coordination, and the Conference of State Bank Supervisors, which supports state regulators in advancing the system of state financial supervision by ensuring safety, soundness, and consumer protection; promoting economic growth; and fostering innovative, responsive supervision. We have participated in more than a dozen public events to publicize OFTI’s activities and extend the invitation to meet, and OFTI staff are scheduled to be featured speakers at fintech events throughout the country throughout the rest of the year and into 2023.
III. MEET WITH WITH THE OFFICE OF FINANCIAL TECHNOLOGY INNOVATION
As part of our engagement role, OFTI has met with dozens of companies, venture capitalists, lawyers, industry advocacy groups, federal and state financial regulators, consumer advocacy groups, and academics, and we host weekly virtual “office hours” that are open to all external stakeholders. The Office of Financial Technology Innovation will continue to reach out to entrepreneurs, business innovators, and academics to facilitate the Department’s monitoring and response to breakthroughs in financial services.
Come talk with us! We welcome conversations with innovators, advocates, and anyone interested in responsible financial innovation in California. Our weekly (virtual) Office Hours are every Tuesday 9–10 a.m. Pacific time. We hope you can drop in to share. We only ask that you register in advance to reserve a 20-minute slot, which is offered on a first-come, first-served basis. We also hope to offer in-person office hours at various locations across California in 2023. Can’t make our Office Hours, desire a longer meeting, or would like to provide materials in advance of a conversation? Please reach out to schedule a meeting by emailing us at OFTI@dfpi.ca.gov or by completing the OFTI contact form.
Christina Tetreault is Deputy Commissioner of the Office of Financial Technology Innovation at the California Department of Financial Protection and Innovation. She submitted this article at the request of Tiffany Heah, the immediate past chair of CLA’s International Law and Immigration Section.