The New York Department of Financial Services (NYDFS) recently surprised financial services’ compliance and legal professionals by announcing the creation of a “Consumer Protection and Financial Enforcement Division.” On April 29, acting NYDFS Superintendent Linda Lacewell announced that Katherine A. Lemire will be appointed the executive deputy superintendent of the new division, which combines the former Enforcement and Financial Frauds and the Consumer Protection divisions. While this may seem to merely be a restructuring to mirror the federal Consumer Financial Protection Bureau, it is actually building the state regulatory examination body of the future.
The financial services industry is facing a technological revolution, and undergoing a dramatic shift in how financial services are delivered to consumers. We hear terms like “big data,” “blockchain,” “artificial intelligence,” “cryptocurrency,” and “digital wallet” every day, and they are the tools of the future for financial services. With this technological revolution, consumer protection also must continue to evolve, and state regulators must stay at the bleeding edge of these changes to ensure that consumers are not disadvantaged or harmed by them.
This year, New York has adopted a number of technology-centric requirements. The New York Cybersecurity Regulation (23 NYCRR 500), which focuses on data security, risk assessments, security policies and controls, and the Insurance Circular Letter No. 1 (2019), which discusses the use of external data sources in underwriting life insurance, highlight NYDFS’ focus on technology and consumer protection.
With the announcement that Lemire will become the executive deputy superintendent of the Consumer Protection and Financial Enforcement Division, NYDFS is showing that it is continuing to focus on the technological revolution. In looking at Lemire’s professional experience, it is clear that NYDFS understands that the future of consumer protection and technology must be tightly interwoven. Lemire focused on complex compliance and investigative matters as a prosecutor in the U.S. Attorney’s Office for the Southern District of New York, and in private practice as a regulatory compliance investigative consultant, she focused on “corporate compliance risks, including digitization and cybersecurity, anti-corruption, culture & ethics transparency, a changing regulatory landscape and accelerated business growth,” addressing “these complex issues across all areas: Prevention & Detection; Investigations & Response; and Remediation & Monitoring and Related Litigation.”
In a financial services marketplace where the advancement of technology is so swift, significant, and complex, the NYDFS Consumer Protection and Financial Enforcement Division, as led by Katherine Lemire, will have significant technological acumen to back its investigative and enforcement authority to enforce New York and federal law. We look forward to continuing to support the financial services and FinTech community to prepare for and work with the NYDFS to insure the compliant delivery of consumer financial services through the proper use of emerging technology.
The material in this publication was created as of the date set forth above and is based on laws, court decisions, administrative rulings and congressional materials that existed at that time, and should not be construed as legal advice or legal opinions on specific facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship.