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Five federal regulators affirmed that the agencies will not take enforcement action based on supervisory guidance, as supervisory guidance does not "have the force and effect of law." Supervisory guidance takes various forms, including interagency statements, advisories, bulletins, policy statements and FAQs.
In a joint statement, the Federal Reserve Board, the Consumer Financial Protection Bureau, the FDIC, the National Credit Union Administration and the Office of the Comptroller of the Currency clarified that the role of supervisory guidance is to outline supervisory expectations or priorities and the agencies' approach to appropriate practices in a specified subject area.
The agencies have set forth five clarifications with respect to supervisory guidance:
- the agencies intend to limit the use of numerical or other fixed thresholds in describing expectations in supervisory guidance, as that would suggest that the guidance is akin to a law or rule;
- examiners will not criticize a supervised financial institution for any violations of supervisory guidance;
- the solicitation of public comment on supervisory guidance should not cause the public to infer that the guidance will be a regulation or used as law;
- the agencies will work to reduce the issuance of multiple supervisory guidance documents on the same topic; and
- the agencies plan to continue clarifying the role of supervisory guidance and encouraging open communication with supervised institutions.
Commentary / Mark Chorazak
Supervisory guidance has always been an important and controversial part of our regulatory infrastructure. At best, it offers banking institutions timely insight on how to approach new or evolving compliance issues or operational risks. At worst, it is de facto regulation, thrust upon institutions without the notice-and-comment process afforded under the Administrative Procedure Act.
In recent years, banking institutions of all sizes and profiles have raised concerns on the mushrooming of guidance and its status as anything but optional. The agencies' recent statement clarifying the role of supervisory guidance is a sensible move, and will be welcomed by compliance and legal personnel.
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