Appendix A to Subpart F of Part 4 - Statement Clarifying the Role of Supervisory Guidance

Appendix A to Subpart F of Part 4 - Statement Clarifying the Role of Supervisory Guidance

Statement Clarifying the Role of Supervisory Guidance

The OCC is issuing this statement to explain the role of supervisory guidance and to describe the OCC's approach to supervisory guidance.

Difference Between Supervisory Guidance and Laws or Regulations

(1) The OCC issues various types of supervisory guidance, including interagency statements, advisories, bulletins, policy statements, questions and answers, and frequently asked questions, to its supervised institutions. A law or regulation has the force and effect of law.^[36] Unlike a law or regulation, supervisory guidance does not have the force and effect of law, and the OCC does not take enforcement actions based on supervisory guidance. Rather, supervisory guidance outlines the OCC's supervisory expectations or priorities and articulates the OCC's general views regarding appropriate practices for a given subject area. Supervisory guidance often provides examples of practices that the OCC generally considers consistent with safety-and-soundness standards or other applicable laws and regulations, including those designed to protect consumers. Supervised institutions at times request supervisory guidance, and such guidance is important to provide insight to the industry, as well as supervisory staff, in a transparent way that helps to ensure consistency in the supervisory approach.

Ongoing Efforts To Clarify the Role of Supervisory Guidance

(2) The OCC is clarifying the following policies and practices related to supervisory guidance:

(i) The OCC intends to limit the use of numerical thresholds or other “bright-lines” in describing expectations in supervisory guidance. Where numerical thresholds are used, the OCC intends to clarify that the thresholds are exemplary only and not suggestive of requirements. The OCC will continue to use numerical thresholds to tailor, and otherwise make clear, the applicability of supervisory guidance or programs to supervised institutions, and as required by statute.

(ii) Examiners will not criticize (through the issuance of matters requiring attention), a supervised financial institution for, and the OCC will not issue an enforcement action on the basis of, a “violation” of or “non-compliance” with supervisory guidance. In some situations, examiners may reference (including in writing) supervisory guidance to provide examples of safe and sound conduct, appropriate consumer protection and risk management practices, and other actions for addressing compliance with laws or regulations.

(iii) Supervisory criticisms should continue to be specific as to practices, operations, financial conditions, or other matters that could have a negative effect on the safety and soundness of the financial institution, could cause consumer harm, or could cause violations of laws, regulations, final agency orders, or other legally enforceable conditions.

(iv) The OCC has at times sought, and may continue to seek, public comment on supervisory guidance. Seeking public comment on supervisory guidance does not mean that the guidance is intended to be a regulation or have the force and effect of law. The comment process helps the OCC to improve its understanding of an issue, to gather information on institutions' risk management practices, or to seek ways to achieve a supervisory objective most effectively and with the least burden on institutions.

(v) The OCC will aim to reduce the issuance of multiple supervisory guidance documents on the same topic and will generally limit such multiple issuances going forward.

(vi) The OCC will continue efforts to make the role of supervisory guidance clear in communications to examiners and to supervised financial institutions and encourage supervised institutions with questions about this statement or any applicable supervisory guidance to discuss the questions with their appropriate agency contact.

Footnotes - Appendix A to Subpart F of Part 4

^[36] Government agencies issue regulations that generally have the force and effect of law. Such regulations generally take effect only after the agency proposes the regulation to the public and responds to comments on the Proposal in a final rulemaking document.