On September 11, 2018, the joint agencies (FDIC, Federal Reserve, NCUA, OCC, and CFPB) released a statement which explains the role of supervisory guidance and how the agencies use this guidance. Supervisory guidance can come in the form of interagency statements, advisories, bulletins, policy statements, questions and answers, and frequently asked questions.
The joint statement began by describing the difference between supervisory guidance and laws or regulations. In doing this, the agencies explained that supervisory guidance does not have have the same stature as a law or regulation and, therefore, the agencies do not take enforcement actions based solely on supervisory guidance. Supervisory guidance is designed to outline supervisory expectations or priorities relating to a specific subject area and may provide examples of best practices that the agencies consider to be appropriate.
In their joint statement, the agencies clarified certain policies and practices related to supervisory guidance. These policies and practices include the following:
“The agencies intend to limit the use of numerical thresholds or other “bright-lines” in describing expectations in supervisory guidance. Where numerical thresholds are used, the agencies intend to clarify that the thresholds are exemplary only and not suggestive of requirements. The agencies 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.”
“Examiners will not criticize a supervised financial institution for a “violation” of supervisory guidance. Rather, any citations will be for violations of law, regulation, or non-compliance with enforcement orders or other enforceable conditions. During examinations and other supervisory activities, examiners may identify unsafe or unsound practices or other deficiencies in risk management, including compliance risk management, or other areas that do not constitute violations of law or regulation. 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.”
“The agencies also have 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 agencies to improve their 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.”
“The agencies will aim to reduce the issuance of multiple supervisory guidance documents on the same topic and will generally limit such multiple issuances going forward.”
“The agencies will continue efforts to make the role of supervisory guidance clear in their 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.”
The entire interagency statement can be found here.