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In July 2020, the OCC proposed a rulemaking to clarify the 'true lender' doctrine as it applies to bank-fintech lending partnerships. The proposed rule sought to establish uniform standards for determining whether a national bank or its non-bank fintech partner is the true lender in a lending arrangement, reducing legal uncertainty that had plagued the marketplace lending model. This was directly relevant to the BaaS ecosystem, where sponsor banks originate loans on behalf of fintech partners. The proposal did not cite specific enforcement cases but addressed a key legal vulnerability for bank-fintech lending programs, where courts in various jurisdictions had reached conflicting conclusions about true lender status. Clarifying this doctrine was seen as critical for the viability of rent-a-charter lending models.

Verified from source: The OCC released a proposed rule to address the 'true lender' doctrine, providing a uniform standard to determine whether a bank or its non-bank partner is the true lender in a credit transaction. A bank is deemed the true lender if it is named in the loan agreement or funds the loan as of the date of origination.