The New York of Department of Financial Services could soon have the power to ban individuals from working in the financial services industry for “egregious conduct,” New York Gov. Andrew Cuomo announced Monday.
Cuomo made the announcement as part of his 2017 “State of the State” addresses, in which he laid out a series of policy initiatives and legislative proposals.
Included among those proposals is a new piece of legislation that would grant the NYDFS, the state’s top financial regulator, the ability to banish what Cuomo calls “bad actors” from the financial services industry for “egregious and deceptive behavior.”
In announcing the proposal, Cuomo cited the recent fake account scandal at Wells Fargo as the kind of action that could get a person banned from working in financial services under the new rule.
“New York is the financial center of the world and we have zero tolerance for those who seek to defraud customers and undermine the system,” Cuomo said. “The excesses and systematic abuse at the center of the Wells Fargo scandal is unacceptable and New York, in its role as a regulator, is seeking to take bold steps to crack down on this unacceptable behavior and ensure these bad actors are barred from working in this industry once and for all.”
Under the proposal, a new section would be added to New York's Financial Services Law, which would “disqualify certain individuals from the banking or insurance industries if, after a hearing, the (NYDFS) Superintendent finds they have done something so severe as to have a direct bearing on their fitness or ability to continue participating in the industry.”
According to Cuomo, the decision to ban someone from the industry would come from the NYDFS Superintendent, a position currently held by Maria Vullo.
Vullo took over as NYDFS Superintendent in January 2016, replacing the agency’s first leader, Ben Lawsky, who wielded a great deal of supervisory power during his time with the NYDFS.
If this proposal passes, Vullo (or whoever else occupies that role in the future) will have significantly more authority than even Lawsky did.
“DFS has responded to new technologies to protect consumers and encourage innovation through existing laws,” Vullo said. “This proposal will provide DFS with additional tools to allow responsible state regulation of Fintech companies while combatting predatory practices by bad actors including payday lenders.”