On August 27, 2026, the OCC and FDIC issued a final rule that continues their effort to focus examiners’ and institutions’ attention on material financial risks and compliance with banking and banking-related laws and regulations. The final rule establishes a uniform definition for the term “unsafe or unsound practice” for the purposes of the agencies’ enforcement actions and supervisory activities.
In particular, the final rule:
Establishes a uniform definition for the term “unsafe or unsound practice” to promote greater clarity and certainty regarding certain enforcement and supervision standards and ensure that examiners prioritize concerns related to material financial risks over those regarding policies, processes, documentation, and other nonfinancial risks;
Establishes uniform standards for when and how the agencies may, as part of the examination process, issue Matters Requiring Attention (MRAs) and communicate supervisory observations and other violations of laws and regulations;
Clarifies how the agencies will tailor their use of the unsafe or unsound practices definition and the MRA standard based on risk factors specific to an institution; and
Explicitly limits its scope to institutions the agencies supervise.
In connection with the final rule, the OCC has substantially revised its policies and procedures manuals (PPMs) regarding enforcement actions and MRAs. The OCC revised PPM 5310-3, “Bank Enforcement Action and Related Matters,” to emphasize material financial risks, and highlight OCC’s three guiding principles when considering bank enforcement actions: escalation, tailoring, and focusing corrective actions on those essential to address specific deficiencies. Additionally, the OCC released PPM 5400-11, “Matters Requiring Attention,” to provide greater clarity and transparency regarding its supervisory standards.
Read the FDIC and OCC’s joint press release here.
The final rule can be found here.
The OCC’s announcement can be found here.