Self-regulatory organisation for fintechs set to change membership profile

FACE's membership may expand to 180 from 80 as it diversifies and becomes more inclusive

The Fintech Association for Consumer Empowerment (FACE) is to change its membership profile to make it more representative of the sector. It is also examining the possibility of creating sub-groups so that entities which are strictly not fintechs but use digital modes – like business correspondents – can also join in.

FACE is the first self-regulatory organisation (SRO) to get the Reserve Bank of India’s (RBI) nod after it released the ‘Framework for SROs in the fintech sector’.

According to FACE’s chief executive officer Sugandh Saxena, “As per SRO-fintech (SRO-FT) charter, we are on the way to scale and diversity membership in all manner of speaking. Given the nature of the fintechs, inclusive membership is critical so that a fuller set of stakeholders and the entire ecosystem is involved and benefits from the SRO.”

FACE has around 80 members, the majority of them in the digital lending space, and post diversification this may move up to 180 thereabouts.

As for creating sub-groups within FACE, this is similar to the Indian Banks’ Association’s organisational structure which has made space via this route for foreign banks, and small finance banks.

In the run up to getting its SRO status, FACE had asked its members to explore joining the Citizen Financial Cyber Fraud Reporting and Management System – part of the National Cybercrime Reporting Portal. Furthermore, FACE members were also requested to appoint a nodal officer to attend to customer grievances and engage with law enforcement agencies to prevent fraud.

FACE’s move is a follow through on the RBI’s stance that an SRO-FT should derive its strength from its membership, ensuring that it is truly representative of the sector. This included fintechs regulated by RBI, like account aggregators and peer-to-peer lending platforms, but excluding banks.

RBI had pointed out that the diverse nature of fintech businesses means entities often operate across domains. For example, some entities might aggregate both loan and insurance products, while regulatory technology providers develop solutions for a range of financial institutions, including lending and insurance.

“Through comprehensive membership agreements that encompass a broad spectrum of industry players, the SRO-FT should gain the legitimacy and credibility to not only frame baseline standards and rules of conduct codes, but also effectively monitor and enforce them”, RBI had said.