January 19, 2021

OCC: Final Rule on Supervisory Guidance Approved

The Office of the Comptroller of the Currency (OCC) today approved a final rule confirming the OCC’s use of supervisory guidance for banks.

The final rule codifies a statement, as amended, that was issued by the OCC, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, and Bureau of Consumer Financial Protection on September 11, 2018 (2018 Statement). The 2018 Statement clarified the differences between regulations and guidance. The OCC is adopting the rule proposed on November 5, 2020, without substantive change. Neither the final rule nor the 2018 Statement reflect a change from longstanding OCC policy.

Unlike a law or regulation, supervisory guidance does not have the force and effect of law, and the OCC does not take enforcement actions or issue supervisory criticisms based on non-compliance with supervisory guidance. Rather, supervisory guidance outlines supervisory expectations and priorities, or articulates views regarding appropriate practices for a given subject area.

In contrast to supervisory guidance, regulations do have the force and effect of law and enforcement actions can be taken if banks are in violation. Regulations are also generally required to go through the notice and comment process.

The final rule will become effective 30 days following publication in the Federal Register.

This post was originally published here.