Washington, D.C. – The OCC’s proposed changes to its framework for banks’ appeals of supervisory decisions would restore confidence, bolster accountability and improve transparency in the appeals process, the Bank Policy Institute, Independent Community Bankers of America and American Association of Bank Directors said in a comment letter filed yesterday.
“The appeals process is a fundamental feature of supervision, but it doesn’t work if banks lack confidence in the system’s impartiality and fear retaliation. The OCC’s proposed changes would strengthen accountability and improve fairness in the appeals process.” – BPI, ICBA and AABD
What’s New. To enhance the independence of the supervisory appeals process, the proposal would establish a new standard of review for material supervisory appeals and would create a new appeals board to replace the OCC’s Ombudsman in adjudicating appeals. This framework allows banks to appeal supervisory actions such as examination ratings or Matters Requiring Attention (MRAs). BPI recommends additional changes to enhance impartiality and accountability, including:
- Adopting measures to foster the independence and expertise of the Appeals Board, such as selecting voting members that are not otherwise currently or recently employed at the OCC, strengthening conflict of interest protections, adding a pool of five to six members to the Appeals Board to serve on panels of three members to hear appeals and appointing members to three-year terms.
- Clarifying and simplifying the rules regarding commencing an appeal, including by allowing senior bank management to authorize an appeal and clarifying the scope of appealable “material supervisory determinations.”
- Strengthening the proposed process for hearing and deciding appeals, including by prohibiting ex parte communications, clarifying that appellants are permitted to supplement the review record and providing banks with a reasonable amount of time to appeal prior to commencement of an enforcement action premised on a material supervisory determination.
Context. The OCC appeals system is little-used and unaltered for over a decade. The FDIC proposed similar changes to its supervisory appeals framework last year. The banking agencies overall are in the midst of a broader effort to reform supervision, aligning supervisory actions with the most critical financial risks.
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About Bank Policy Institute.
The Bank Policy Institute is a nonpartisan public policy, research and advocacy group that represents universal banks, regional banks and the major foreign banks doing business in the United States. The Institute produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud and other information security issues.
About the American Association of Bank Directors
The American Association of Bank Directors is a non-profit organization that represents the interests of bank directors throughout the United States. Founded in 1989, the American Association of Bank Directors is the only trade group in the United States devoted solely to bank directors and their information, education, and advocacy needs.
About the Independent Community Bankers of America
The Independent Community Bankers of America® has one mission: to create and promote an environment where community banks flourish. We power the potential of the nation’s community banks through effective advocacy, education, and innovation. As local and trusted sources of credit, America’s community banks leverage their relationship-based business model and innovative offerings to channel deposits into the neighborhoods they serve, creating jobs, fostering economic prosperity, and fueling their customers’ financial goals and dreams. For more information, visit ICBA’s website at icba.org.
Media Contact
Tara Payne
Bank Policy Institute
tara.payne@bpi.com
David Baris
American Association of Bank Directors
dbaris@aabd.org
Nicole Swann
Independent Community Bankers of America
Nicole.Swann@icba.org
