On September 11, 2018, the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency, and the Consumer Financial Protection Bureau (the “agencies”) issued a joint statement clarifying the role of supervisory guidance.
As intended by the statement, supervisory guidance, include interagency statements, advisories, bulletins, policy statements, questions and answers, and frequently asked questions, to the agencies respective supervised institutions.
According to the statement, supervisory guidance outlines the agencies’ supervisory expectations or priorities and articulates the agencies’ general views regarding appropriate practices. It does not, however, have the force and effect of law and agencies do not take enforcement actions based on supervisory guidance.
The statement also explains that where agencies use numerical thresholds or other “bright-lines” in describing expectations in supervisory guidance, these “bright-lines” are exemplary only and not suggestive of requirements.
Finally, the statement explains that examiners may identify unsafe practices or other deficiencies that do not constitute violations of law and may reference supervisory guidance to provide examples of safe and appropriate conduct, but will not criticize a supervised financial institution for a “violation” of supervisory guidance.
The interagency statement is undoubtedly a welcomed clarification for supervised financial institutions. However, as mentioned in the statement supervisory guidance outlines the agencies’ supervisory expectations or priorities and articulates the agencies’ general views regarding appropriate practices for a given subject area. As such, supervisory guidance provides important insight to the agencies perspective on compliance matters; and therefore must not be ignored.
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