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From Banking and Finance Law Daily, September 11, 2018

Regulators clarify guidance isn’t law; violations won’t bring enforcement actions

By Richard A. Roth, J.D.

Supervisory guidance "does not have the force and effect of law," according to an interagency statement by the bank, thrift, and credit union regulatory agencies. Enforcement actions are not taken for violations of supervisory guidance, the agencies said. The statement was issued by the Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Consumer Financial Protection Bureau, and National Credit Union Administration.

According to the statement, supervisory guidance is intended to outline regulators’ supervisory expectations and priorities and describe appropriate practices. Specific practices that are consistent with legal or regulatory requirements might be discussed, but only as examples.

Policies and practices. The interagency statement says that it clarifies five specific policies and practices:

  1. In the future, the agencies will limit the use of numerical thresholds or other "bright line" criteria. When they are used, the guidance will make clear they are examples, not requirements.
  2. Examiners will not criticize financial institutions for deviating from supervisory guidance. Reports of examination may identify practices that are contrary to supervisory expectations, but citations will be restricted to violations of a law or regulation.
  3. An agency’s choice to solicit public comment on proposed supervisory guidance does not mean the guidance is intended to be considered to be a regulation or to have the force of law.
  4. The agencies intend to avoid issuing multiple supervisory guidance documents on the same subject.
  5. The agencies plan to continue working to make the role of supervisory guidance clear to both financial institutions and examiners. They also encourage institutions to contact their examiners or other agency representatives with any questions.

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