High 5 tales of the week – 29 April 2022

Right here’s our decide of 5 of the highest information tales from the world of finance and tech this week.

CFPB invokes “largely unused” Dodd-Frank legislation to scrutinise fintechs

The US Client Monetary Safety Bureau (CFPB) has stated it’s invoking a largely unused authorized provision to extend the scrutiny of nonbank monetary establishments.

CFPB director Rohit Chopra

Utilising this “dormant authority” inside the regulator’s nonbank supervision programme, CFPB director Rohit Chopra says, will permit it to stage the enjoying area between banks and nonbanks and defend customers.

“This authority offers us vital agility to maneuver as shortly because the market, permitting us to conduct examinations of economic firms posing dangers to customers and cease hurt earlier than it spreads,” Chopra provides.

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UK challenger Starling secures £130.5m funding at £2.5bn valuation

UK challenger Starling Financial institution has accomplished an inside fundraise of £130.5 million at a pre-money valuation of greater than £2.5 billion.

The agency will use the brand new funds to proceed its development and in addition plans to “construct a conflict chest for acquisitions”.

“We’re taking a look at a lot of potential targets,” says a spokesperson.

Starling made its first acquisition in July final yr, a £50 million deal for buy-to-let mortgage group Fleet Mortgages.

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Robinhood proclaims layoffs, sheds 9% of full-time workforce

Inventory buying and selling app Robinhood is to chop 9% of its full-time workforce as the corporate adjusts to the financial surroundings of the post-pandemic period and goals to proceed its mission to “democratise finance”.

Vlad Tenev

Robinhood CEO Vlad Tenev

Robinhood CEO Vlad Tenev introduced the transfer to staff at a company-wide assembly, citing duplicate roles and job features and “extra layers and complexity than are optimum” after a interval of “hyper development”.

The agency skilled “speedy headcount development” because it rode a pandemic-era increase accelerated by lockdowns, traditionally low rates of interest and financial stimulus.

With a view to sustain with this development, the corporate’s workforce expanded from 700 to just about 3,800.

“After fastidiously contemplating all these components, we decided that making reductions to Robinhood’s employees is the best determination to enhance effectivity, enhance our velocity, and make sure that we’re attentive to the altering wants of our prospects,” Tenev says.

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Tighten monetary crime controls, FCA tells challengers

A evaluation by the UK’s Monetary Conduct Authority (FCA) has discovered that some challenger banks within the nation want to enhance how they assess monetary crime threat.

The regulator performed the evaluation over 2021, discovering that some challenger banks didn’t have monetary crime threat assessments in place for his or her prospects.

The evaluation additionally recognized a rising variety of suspicious exercise reviews reported by challengers, which the regulator says raises questions across the adequacy of checks when onboarding new prospects.

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MoneyGram sued by CFPB and NYAG for allegedly “leaving households excessive and dry”

P2P remittance paytech MoneyGram is being sued by the US Client Monetary Safety Bureau (CFPB) and the New York Lawyer Common (NYAG) for alleged client monetary safety legislation violations.


MoneyGram has dismissed the lawsuit as “meritless”

The lawsuit alleges that MoneyGram – one of many largest remittance suppliers within the US (and within the strategy of being acquired by PE firm Madison Dearborn Partners) – did not ship funds promptly to recipients overseas, “leaving households excessive and dry”, a declare the corporate has dismissed as “meritless”.

CFPB director Rohit Chopra says MoneyGram has spent years “failing its prospects and failing to comply with the legislation”.

The CFPB says a “significant slice” of the corporate’s cash switch transactions are initiated by immigrants or refugees within the US sending a reimbursement to their native nations.

It’s these immigrant communities MoneyGram has “let down”, says NYAG Letitia James. “Firms have an obligation to be clear with customers, deal with them pretty, and comply with the legislation, however MoneyGram repeatedly failed to take action,” James provides.

Dallas-based MoneyGram responded to the “baseless claims” issued by the CFPB, claiming it’s an trade chief in compliance and client safety and it’s “absolutely ready to vigorously defend itself”.

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