Industry participants will gather in New York on 22 June to discuss the major issues in marketplace lending securitisation at SCI's third annual MPL ABS seminar. The first panel will look at regulatory challenges and developments in the sector, including the future of the CFPB and the repercussions of the Madden v Midland case.

The future of the CFPB is a key consideration after a legal case questioned the constitutionality of its structure. President Trump has suggested that he may severely reduce its powers and on 24 May the US Court of Appeals for the District of Columbia heard oral arguments on the CFPB, although no decisions have yet been made.

"There is some uncertainty about the CFPB, particularly the future structure of the CFPB, in the wake of the Second Circuit's decision in October of last year in the PHH case. The Second Circuit ruled in PHH that the CFPB's current structure - that is, a structure with a single director, removable only for cause - was unconstitutional," says Ross Wallin, partner at Grais and Ellsworth.

He continues: "But the Second Circuit subsequently granted the CFPB's petition for rehearing en banc, which effectively vacated the Second Circuit's October decision."

Wallin notes that the effect of a structural change at the regulator and its ability to wield real enforcement ability is yet to be seen. If major changes are executed, it could have significant implications for financial firms, as well as marketplace lending companies.

As well as the status of the CFPB, marketplace lending is still dealing with the repercussions of the Madden v Midland case which contested the true lender status of marketplace lenders. However, Wallin points out that because the US Supreme court refused to hear the case, it remains 'good law' in the Second Circuit.

He suggests too that a clarifying decision from the Supreme Court that effectively would resolve the issues raised in Madden does not seem imminent. As a result, he believes marketplace lenders seem to have "adjusted their operations to adapt to life after Madden, and presumably will continue to do so".

Another issue that may be discussed on the panel in June is whether platforms may look to circumvent state laws by applying for a bank charter through the Office of the Comptroller of the Currency (OCC). The regulator announced last year that it had drafted a policy to enable fintech firms to apply to become national banks.

Wallin is not sure, however, that such an idea will take off. He says: "While I think that platforms may look at OCC special-purpose bank charters as an option, I think most would see it as a mixed bag. One the one hand, a national charter would provide some uniformity and relief from state-by-state licensing and compliance, but the costs of obtaining the charter and other regulatory requirements could be significant."

Another topic that could be discussed is which regulator may look to oversee the marketplace lending space. Currently there remains a lack of a singular body taking responsibility for regulation of the industry.

The SEC has made some motions that it could look to step-up involvement in regulation of the sector but this could depend on a number of factors. "To some degree, regulators compete with each other and have overlapping mandates," notes Wallin.

"It is difficult to predict the relative impacts of different regulatory bodies going forward, but it is certainly an issue. If the CFPB's influence were to diminish, the SEC's role could become more prominent."

SCI's third annual marketplace lending securitisation seminar will be held at 250 West 55th Street, New York, on Thursday 22 June. Further details and the link to register are available here.

RB