Latino Focused Lender Opportunity Scrap Bank Charter
Oportun, a low-to-moderate-income loan specialist who serves many Latinos, has withdrawn its bank charter application.
The withdrawal was voluntary, and a report from the company said the CFPB was investigating allegations that Oportun violated consumer protection laws with its collection practices, particularly those that centered on the harsh treatments that l company donated during the pandemic.
According to the report, nearly two dozen consumer groups had written to Acting Comptroller Michael Hsu asking the OCC to wait until the CFPB has completed its investigation before moving forward with the charter.
“We have forged a constructive relationship with the OCC since our initial request was filed almost a year ago,” Oportun said in his statement Friday. “We remain committed to pursuing a banking charter with the OCC and plan to modify elements of our charter request to reflect changes in our business.”
Oportun is not the only company to recently withdraw its request for a banking charter. Monzo, the UK challenger bank, gave up its efforts to obtain a US banking license because it saw that the OCC was not likely to approve it.
And other FinTechs withdrew charter requests and then were reclassified or recalibrated in some way.
Square, for example, filed for an industrial loan company charter with the FDIC, but withdrew its application in July 2018. It then filed a new case and was approved in March 2020.
Timely courted controversy in August 2020. ProPublica and the Texas Tribune reported that the company was suing thousands of low-income Latinos in an attempt to collect COVID-19-era debt since the early days of the pandemic.
The company said it would drop claims and suspend news filing, in addition to capping its interest rate at 36%, in response to criticism.
However, Oportun has remained the target of criticism from advocacy groups, claiming the company has “armed the legal system as a debt collector.”
PYMNTS writes that Opportun was one of many companies to apply for national banking charters in 2020 as digital banking has become a trend.
Read more: The digital shift attracts more FinTechs to obtain banking licenses