Fintech Credit and Consumer Financial Protection
Forthcoming in I Chiu and G Deipenbrock (Eds) Routledge Handbook on Fintech and the Law (2020)
Posted: 1 Jul 2020 Last revised: 20 Aug 2020
Date Written: June 1, 2020
This paper examines the digitisation, datafication and disintermediation of consumer credit markets — a phenomenon described as ‘fintech credit’ — and the implications of this phenomenon for the functioning and regulation of consumer credit markets, focusing on the challenges for consumer protection and in particular, consumer privacy. As with all advances in technology, fintech credit presents both opportunities and risks for consumers. From the perspective of consumer privacy, however, the datafied paradigm of fintech credit stands to do greater harm to consumers than good. The paper argues that the limited effectiveness of market-based solutions for protecting consumers’ (financial) privacy calls for stricter public regulation. In particular, a stricter duty of care and higher justificatory threshold for data processing in the context of consumer credit. More fundamentally, the datafication of consumer credit markets due to fintech credit makes the protection of consumer privacy increasingly important to the overarching sectoral goal of consumer financial protection. Furthermore, the context-specific nature of privacy norms and normative trade-offs (e.g. balancing privacy costs with the benefits of using consumer data for assessing creditworthiness) advocates in favour of regulating consumer privacy at the sectoral level. The paper thus calls for a broader interpretation of the consumer financial protection mandate— in the UK, under the auspices of the Financial Conduct Authority — to include consumer privacy, a call that will be developed in future work.
Keywords: Fintech, privacy, data protection, GDPR, consumer finance, consumer credit, consumer protection, financial regulation, machine learning, artificial intelligence, law and technology, p2p lending, FCA
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