New York Superintendent of Financial Services Benjamin Lawsky, unveiled the mission of the freshly constituted New York Department of Financial Services (DFS) at its launch in New York today, saying it would be focusing on protecting consumers while striving to serve as a model of efficiency.
The department, which is a new amalgamation of the old insurance and banking departments, with added divisions, will be going after fraud and any unwarranted financial services actions against consumers with its new “Financial Frauds and Consumer Protection Division” and carry out penalties under a separate new enforcement division covering all financial services activity in the state.
The DFS creates a new executive level position, a Director of Enforcement, who will oversee all criminal investigations. That person has yet to be appointed.
Still, industry sources said that while the focus on the position seemed in line with Lawsky’s public statements recently, it was not the feared proposal that would have created a new department with very broad powers to investigate financial crimes. The bill that pased limited the scope of the DFS’s enforcement authority to fraudulent insurance and banking practices.
“The Department’s new Financial Frauds and Consumer Protection Division has greatly strengthened investigative and enforcement powers to shut down financial scams and ripoffs,” stated an enthusiastic Chuck Bell, programs director for Consumers Union.
The DFS’s new jobs initiative will be led by Deputy Superintendent for Financial Services James Wrynn, formerly the N.Y. Insurance Department Superintendent, who will still help supervise the state insurance industry.
“We hope and expect that the new combined department will be an even more effective regulator, balancing the needs of consumers and providers of financial services,” stated Christopher Brassard, chair of the board of the Independent Insurance Agents & Brokers of New York.
”We congratulate Benjamin Lawsky as he assumes his new position as Superintendent of Financial Services. He is a dedicated public servant and ACLI looks forward to working with him,” stated an ACLI spokesman.
Lawsky also announced that the new department is “on track to achieve more than $25 million in budget savings in just its first year,” Superintendent Lawsky said.
DFS will have five main divisions:
• The Insurance Division, the old New York Insurance Department, will carry on the core functions of regulating all insurance activities in New York, including life, property and health insurance.
• The Banking Division will continue regulating state chartered banks, along with other financial services providers such as mortgage servicers and originators, check cashers, money transmitters and budget planners.
• The Financial Frauds and Consumer Protection Division will protect and educate consumers of financial products and services and fight financial fraud. The Division will pursue civil and criminal investigations and bring enforcement proceedings as appropriate.
• The Real Estate Finance Division will focus on all aspects of the mortgage industry to ensure that the lessons from the recent financial crisis are learned and new reforms are instituted.
• The Capital Markets Division will actively monitor the latest developments and products and help the Department better police systemic risk.
“We are taking the best of the Banking and Insurance Departments and working to add new skills and responsibilities so we can keep pace with the rapid developments in the financial markets,” Superintendent Lawsky said today.