WASHINGTON — Consumer protection groups opposing the Office of the Comptroller of the Currency's plan to offer limited-purpose bank charters to fintech companies raised concerns that the move could allow payday lenders to operate nationally.

"The OCC charter throws the door to the henhouse wide open for the payday loan foxes that have long sought to dig their way into our states," said PaydayFreeLandia, a coalition of consumer protection groups operating in states that have banned payday lending, in a statement Friday.

Though payday lenders have apparently already expressed interest in the fintech charter, the OCC has suggested it was not likely to ever consider them.

"The OCC took steps in the early 2000s to eliminate abusive practices common to payday lenders at the time," said OCC Chief Counsel Amy Friend in a statement to American Banker last month. "As a result, abusive payday lending was virtually eliminated in the federal banking system. The agency has no intention of allowing these abusive practices to return."

OCC Chief Counsel Amy Friend has signaled that payday lenders will not be allowed to obtain a fintech charter.

In another joint letter Friday, more than 270 consumer protection groups warned that the OCC's plan could undermine state efforts to protect consumers from high interest rates and other predatory lending activities.

"Given the general absence of federal usury caps, lenders under the OCC's proposal would have no functional limit on the interest rates and related fees they could charge," said the letter, which was sent Friday to the OCC. "This would effectively nullify critical existing state rate caps."

The OCC's initiative — which was announced in December and for which the request for public comments will close on Sunday — could also take away supervisory authority from states, the groups warned.

"Beyond interest rate caps, the proposal weakens states' ability to protect consumers and small businesses through supervision and enforcement," the letter stated.

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Lalita Clozel

Lalita Clozel covers fintech regulation, anti-money-laundering, cybersecurity and the Federal Deposit Insurance Corp. in American Banker's Washington bureau.