OCC Finalizes Controversial ‘Fair Access’ Proposal

The OCC today finalized a controversial proposal stating that banks should provide access to services, capital and credit based on their risk assessment of individual customers and not make broad-based decisions that affect whole categories or classes of customers. This action comes as Brian Brooks prepares to step down as acting comptroller of the currency today.

The final rule, which is minimally changed from the proposal, requires covered national banks and federal savings associations (generally, those with $100 billion or more in assets) to provide financial products and services to businesses on proportionally equal basis and not deny service except based on documented failure to meet quantitative standards. Among other things, the final rule limits the discretion of covered banks to determine which businesses they will provide services to, stating that “the OCC expects banks to apply quantitative, impartial risk-based standards in evaluating individual customers, including when considering reputation risk, qualitative factors, and a borrower’s industry” and that “it is not sufficient to evaluate these characteristics solely on a subjective basis.”

The American Bankers Association had vigorously opposed the proposal, writing in previous comments that the OCC lacks the statutory authority to pursue such a rulemaking, nor did it meet procedural requirements for issuing the proposal. ABA also expressed concerns that the OCC seriously underestimated the cost burden that it would impose upon covered banks.

“We are disappointed that the OCC has chosen to rush through this ill-advised rulemaking on the Acting Comptroller’s last day in office,” said ABA SVP Hugh Carney. “In addition to short-circuiting the traditional rulemaking process and failing to take into account thoughtful comments from thousands of stakeholders, we believe it is a mistake for the OCC to mandate which businesses banks must service. Banks are in the best position to manage their risks and maintain their safety and soundness. Given those procedural and substantive concerns, we urge that this rule not take effect.”

The rule is set to take effect on April 1, 2021, but that date may be extended as the incoming administration decides how to proceed.