Supervisory guidance is not law, CFPB clarifies

by Francis Monfort13 Sep 2018

Supervisory guidance does not have the force and effect of law, and is not a proper basis for an enforcement action, according to a statement clarifying the role of such guidance released by a group of five agencies.

The Consumer Financial Protection Bureau joined the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, and Office of the Comptroller of the Currency in releasing the interagency statement.

The five agencies issue various types of supervisory guidance, including interagency statements, advisories, bulletins, policy statements, questions and answers, and frequently asked questions, to their respective supervised institutions.

The agencies distinguished supervisory guidance from laws and regulations.

"Supervisory guidance outlines the agencies’ supervisory expectations or priorities and articulates the agencies’ general views regarding appropriate practices for a given subject area,” the agencies said in a statement. “Supervisory guidance often provides examples of practices that the agencies generally consider 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 industry, as well as supervisory staff, in a transparent way that helps to ensure consistency in the supervisory approach.”

The agencies also discussed their ongoing efforts to clarify the role of supervisory guidance. They said that they plan to limit the use of numerical thresholds in describing expectations in supervisory guidance. Additionally, they will aim to reduce the issuance of multiple supervisory guidance documents on the same topic and will generally limit such multiple issuances in the future. The agencies also said that they will continue efforts to make the role of supervisory guidance clear in their communications.

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