82 FR 47602 - Rescission of Guidance on Supervisory Concerns and Expectations Regarding Deposit Advance Products
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency Federal Register Volume 82, Issue 196 (October 12, 2017)
Office of the Comptroller of the Currency
Federal Register Volume 82, Issue 196 (October 12, 2017)
| Page Range | 47602-47603 | |
| FR Document | 2017-22012 |
[Federal Register Volume 82, Number 196 (Thursday, October 12, 2017)] [Notices] [Pages 47602-47603] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-22012] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency [Docket ID OCC-2017-0019] Rescission of Guidance on Supervisory Concerns and Expectations Regarding Deposit Advance Products AGENCY: Office of the Comptroller of the Currency (OCC), Treasury. ACTION: Rescission of guidance. ----------------------------------------------------------------------- SUMMARY: The OCC is rescinding its supervisory guidance entitled ``Guidance on Supervisory Concerns and Expectations Regarding Deposit Advance Products'' and OCC Bulletin 2013-40 (collectively, Guidance), which address the OCC's expectations regarding the offering of deposit advance products by national banks and federal savings associations (collectively, banks). The OCC is rescinding the Guidance in light of the adoption of a final rule on payday, vehicle title, and certain high-cost installment loans by the Consumer Financial Protection Bureau (CFPB), which overlaps with the Guidance, resulting in potentially inconsistent regulatory guidance for banks. DATES: This Guidance is rescinded effective October 5, 2017. FOR FURTHER INFORMATION CONTACT: Paul Reymann, Director, Consumer Compliance Policy, (202) 649-5470; Steven Jones, Director, Retail Credit Risk, (202) 649-6220; Kenneth Lennon, Director, Community and Consumer Law, (202) 649-6350; Office of the Comptroller of the Currency, 400 7th Street SW., Washington, DC 20219 or, for persons who are deaf or hard of hearing, TTY, (202) 649-5597. SUPPLEMENTARY INFORMATION: In 2013, the OCC issued the Guidance to set forth the agency's expectations regarding deposit advance products offered by banks.\1\ A deposit advance product is a small-dollar, short-term loan or line of credit that a bank makes available to a customer whose deposit account reflects recurring direct deposits. The customer obtains a loan, which is to be repaid from the proceeds of the next direct deposit. The Guidance highlighted potential credit, reputation, operational, compliance, and other issues associated with deposit advance products and encouraged banks to be aware of these issues so that banks offering these products in response to their customers' short-term, small-dollar credit needs did not engage in practices that would increase these risks or result in the unfair treatment of bank customers. --------------------------------------------------------------------------- \1\ 78 FR 70624 (November 26, 2013). --------------------------------------------------------------------------- Since adoption of the Guidance in 2013, the regulatory and marketplace landscapes have changed, and the OCC has gained supervisory experience with application of the Guidance to deposit advance products. Most recently, the CFPB adopted a rule entitled ``Payday, Vehicle Title, and Certain High-Cost Installment Loans'' (CFPB's Final Rule),\2\ regarding short-term, small-dollar loans, which overlaps with the Guidance and will therefore apply to many of the loans addressed by the Guidance. For example, the CFPB's Final Rule includes underwriting requirements for covered loans that are inconsistent with certain aspects of the Guidance. In addition, the CFPB's Final Rule provides for cooling-off periods that differ from those set forth in the Guidance. Thus, the continuation of the Guidance would subject banks to potentially inconsistent regulatory direction and undue burden as banks prepare to implement the requirements of the CFPB's Final Rule. --------------------------------------------------------------------------- \2\ Today the CFPB announced that it adopted and submitted the CFPB's Final Rule for publication in the Federal Register. https://www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/payday-vehicle-title-and-certain-high-cost-installment-loans/. The CFPB issued its notice of proposed rulemaking on payday loans in 2016. 81 FR 47864 (July 22, 2016). --------------------------------------------------------------------------- In addition, based on the changed regulatory and marketplace landscape and our supervisory experience noted above, the OCC is concerned that banks are able to serve consumers' needs for short-term, small-dollar credit. As a practical matter, consumers who would prefer to rely on banks and thrifts for these products may be forced to rely on less regulated lenders and be exposed to the risk of consumer harm and expense. Accordingly, the OCC is rescinding the Guidance. In rescinding the Guidance, the OCC considered that many other OCC guidance documents cover key elements of consumer lending, and these guidance documents [[Page 47603]] remain in effect and will continue to apply to deposit advance products.\3\ --------------------------------------------------------------------------- \3\ See, e.g., Advisory Letter 2000-7, ``Abusive Lending Practices''; Comptroller's Handbook, ``Deposit-Related Credit'' (underwriting, credit administration, management oversight); OCC Bulletin 2010-16, ``Guidance for Evaluating Capital Planning and Adequacy'' (capital planning); OCC Bulletin 2001-37, ``ALLL Methodologies and Documentation'' (ALLL); OCC Bulletin 2013-29, ``Third-Party Relationships: Risk Management Guidance,'' as supplemented by OCC Bulletin 2017-21, ``Third-Party Relationships: Frequently Asked Questions to Supplement OCC Bulletin 2013-29.'' The ``Deposit-Related Credit'' booklet, which provides guidance to and procedures for examiners, will be revised to remove references to the Guidance. --------------------------------------------------------------------------- The OCC continues to support and encourage banks and savings associations to develop and use innovative products to meet customers' short-term, small-dollar credit needs and will continue to ensure that banks that choose to offer this type of product do so responsibly. In providing deposit advance products and other short-term, small-dollar loans, banks should be guided by basic principles of prudent underwriting and risk management as well as fair and inclusive treatment of customers. In particular, banks should consider the following core principles when offering innovative, short-term, small- dollar loan products:All bank products should be consistent with safe and sound banking, treat customers fairly, and comply with applicable laws and regulations. Banks should effectively manage the risks associated with the products they offer, including credit, operational, compliance, and reputation. All credit products should be underwritten based on reasonable policies and practices, including guidelines governing the amounts borrowed, frequency of borrowing, and repayment requirements. OCC examiners will continue to assess how banks offer short-term, small-dollar loan products, including whether management oversight is appropriate, whether risks posed by third-party relationships are appropriately managed, and whether the product complies with applicable federal consumer protection statutes. The OCC will take appropriate action to address any unsafe or unsound banking practice or violations of law associated with these products. Dated: October 5, 2017. Keith A. Noreika, Acting Comptroller of the Currency. [FR Doc. 2017-22012 Filed 10-11-17; 8:45 am] BILLING CODE 4810-33-P
![47602 Federal Register / Vol. 82, No. 196 / Thursday, October 12, 2017 / Notices
NHTSA Decision the noncompliant vehicles under their loan or line of credit that a bank makes
NHTSA Analysis: MTI explains that control after MTI notified them that the available to a customer whose deposit
the noncompliance is that the wheels on subject noncompliance existed. account reflects recurring direct
the subject vehicles incorrectly identify Authority: 49 U.S.C. 30118, 30120: deposits. The customer obtains a loan,
the rim size as 24.5″ x 8.25″ instead of delegations of authority at 49 CFR 1.95 and which is to be repaid from the proceeds
22.5″ x 8.25″, and therefore do not meet 501.8. of the next direct deposit. The Guidance
the requirements of paragraph S5.2(b) of highlighted potential credit, reputation,
Jeffrey M. Giuseppe, operational, compliance, and other
FMVSS No. 120. Specifically, the Director, Office of Vehicle Safety Compliance.
marking error overstates the wheel issues associated with deposit advance
[FR Doc. 2017–22111 Filed 10–11–17; 8:45 am] products and encouraged banks to be
diameter by 2″.
NHTSA has reviewed MTI’s analyses BILLING CODE 4910–59–P aware of these issues so that banks
that the subject noncompliance is offering these products in response to
inconsequential to motor vehicle safety their customers’ short-term, small-dollar
and provides the following analysis: DEPARTMENT OF THE TREASURY credit needs did not engage in practices
When it comes to mating a tire and that would increase these risks or result
rim combination, it becomes very Office of the Comptroller of the in the unfair treatment of bank
apparent very quickly that either an Currency customers.
oversized tire on a rim or an undersized [Docket ID OCC–2017–0019] Since adoption of the Guidance in
tire on the same sized rim will not 2013, the regulatory and marketplace
properly seat to that rim. In this Rescission of Guidance on landscapes have changed, and the OCC
particular case (the former) as MTI has Supervisory Concerns and has gained supervisory experience with
mentioned in its petition, if someone Expectations Regarding Deposit application of the Guidance to deposit
tries to mount a 24.5″ inch tire on an Advance Products advance products. Most recently, the
undersized rim (22.5″), it will not hold CFPB adopted a rule entitled ‘‘Payday,
AGENCY: Office of the Comptroller of the Vehicle Title, and Certain High-Cost
air and therefore cannot be inflated. The Currency (OCC), Treasury.
inability to mount the incorrect tire on Installment Loans’’ (CFPB’s Final
the rim precludes one’s ability to ACTION: Rescission of guidance. Rule),2 regarding short-term, small-
actually drive with an incorrect tire-rim dollar loans, which overlaps with the
SUMMARY: The OCC is rescinding its
combination on public roadways. Guidance and will therefore apply to
supervisory guidance entitled
Furthermore, FMVSS No. 120 paragraph many of the loans addressed by the
‘‘Guidance on Supervisory Concerns
S5.3 requires vehicles be labeled with Guidance. For example, the CFPB’s
and Expectations Regarding Deposit
proper tire/rim size combinations. This Final Rule includes underwriting
Advance Products’’ and OCC Bulletin
additional information is available to requirements for covered loans that are
2013–40 (collectively, Guidance), which
provide the vehicle operator or inconsistent with certain aspects of the
address the OCC’s expectations
technician with the correct tire/rim size Guidance. In addition, the CFPB’s Final
regarding the offering of deposit
information. Rule provides for cooling-off periods
advance products by national banks and
NHTSA’s Decision: In consideration that differ from those set forth in the
federal savings associations
of the foregoing, NHTSA finds that MTI Guidance. Thus, the continuation of the
(collectively, banks). The OCC is
has met its burden of persuasion that Guidance would subject banks to
rescinding the Guidance in light of the
the FMVSS No. 120 noncompliance is potentially inconsistent regulatory
adoption of a final rule on payday,
inconsequential as it relates to motor direction and undue burden as banks
vehicle title, and certain high-cost
vehicle safety. Accordingly, MTI’s prepare to implement the requirements
installment loans by the Consumer
petition is hereby granted and MTI is of the CFPB’s Final Rule.
Financial Protection Bureau (CFPB),
consequently exempted from the which overlaps with the Guidance, In addition, based on the changed
obligation to provide notification of, and resulting in potentially inconsistent regulatory and marketplace landscape
remedy for, the subject noncompliance regulatory guidance for banks. and our supervisory experience noted
in the affected vehicles under 49 U.S.C. above, the OCC is concerned that banks
DATES: This Guidance is rescinded
30118 and 30120. are able to serve consumers’ needs for
NHTSA notes that the statutory effective October 5, 2017.
short-term, small-dollar credit. As a
provisions (49 U.S.C. 30118(d) and FOR FURTHER INFORMATION CONTACT: Paul practical matter, consumers who would
30120(h)) that permit manufacturers to Reymann, Director, Consumer prefer to rely on banks and thrifts for
file petitions for a determination of Compliance Policy, (202) 649–5470; these products may be forced to rely on
inconsequentiality allow NHTSA to Steven Jones, Director, Retail Credit less regulated lenders and be exposed to
exempt manufacturers only from the Risk, (202) 649–6220; Kenneth Lennon, the risk of consumer harm and expense.
duties found in sections 30118 and Director, Community and Consumer Accordingly, the OCC is rescinding
30120, respectively, to notify owners, Law, (202) 649–6350; Office of the the Guidance. In rescinding the
purchasers, and dealers of a defect or Comptroller of the Currency, 400 7th Guidance, the OCC considered that
noncompliance and to remedy the Street SW., Washington, DC 20219 or, many other OCC guidance documents
defect or noncompliance. Therefore, this for persons who are deaf or hard of cover key elements of consumer
hearing, TTY, (202) 649–5597.
asabaliauskas on DSKBBXCHB2PROD with NOTICES
decision only applies to the subject lending, and these guidance documents
vehicles that MTI no longer controlled SUPPLEMENTARY INFORMATION:
at the time it determined that the In 2013, the OCC issued the Guidance 2 Today the CFPB announced that it adopted and
noncompliance existed. However, the to set forth the agency’s expectations submitted the CFPB’s Final Rule for publication in
granting of this petition does not relieve regarding deposit advance products the Federal Register. https://
vehicle distributors and dealers of the offered by banks.1 A deposit advance www.consumerfinance.gov/policy-compliance/
rulemaking/final-rules/payday-vehicle-title-and-
prohibitions on the sale, offer for sale, product is a small-dollar, short-term certain-high-cost-installment-loans/. The CFPB
or introduction or delivery for issued its notice of proposed rulemaking on payday
introduction into interstate commerce of 1 78 FR 70624 (November 26, 2013). loans in 2016. 81 FR 47864 (July 22, 2016).
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![Federal Register / Vol. 82, No. 196 / Thursday, October 12, 2017 / Notices 47603
remain in effect and will continue to DEPARTMENT OF THE TREASURY DEPARTMENT OF THE TREASURY
apply to deposit advance products.3
The OCC continues to support and Office of Foreign Assets Control Office of Foreign Assets Control
encourage banks and savings Sanctions Actions Pursuant to Sanctions Actions Pursuant to
associations to develop and use Executive Order 13581 Executive Order 13581
innovative products to meet customers’
short-term, small-dollar credit needs AGENCY: Office of Foreign Assets AGENCY: Office of Foreign Assets
and will continue to ensure that banks Control, Treasury. Control, Treasury.
that choose to offer this type of product ACTION: Notice. ACTION: Notice.
do so responsibly. In providing deposit
advance products and other short-term, SUMMARY: The U.S. Department of the SUMMARY: The U.S. Department of the
small-dollar loans, banks should be Treasury’s Office of Foreign Assets Treasury’s Office of Foreign Assets
guided by basic principles of prudent Control (OFAC) is publishing the name Control (OFAC) is publishing the name
underwriting and risk management as of a person whose property and interests of a person whose property and interests
well as fair and inclusive treatment of in property have been unblocked in property have been unblocked
customers. In particular, banks should pursuant to Executive Order 13581 of pursuant to Executive Order 13581 of
consider the following core principles July 24, 2011, ‘‘Blocking Property of July 24, 2011, ‘‘Blocking Property of
when offering innovative, short-term, Transnational Criminal Organizations.’’ Transnational Criminal Organizations.’’
small-dollar loan products: DATES: OFAC’s actions described in this DATES: OFAC’s actions described in this
• All bank products should be notice were effective on June 6, 2017. notice were effective on June 21, 2017.
consistent with safe and sound banking, FOR FURTHER INFORMATION CONTACT: The
treat customers fairly, and comply with FOR FURTHER INFORMATION CONTACT: The
Department of the Treasury’s Office of Department of the Treasury’s Office of
applicable laws and regulations. Foreign Assets Control: Assistant Foreign Assets Control: Assistant
• Banks should effectively manage Director for Licensing, tel.: 202–622– Director for Licensing, tel.: 202–622–
the risks associated with the products 2480, Assistant Director for Regulatory 2480, Assistant Director for Regulatory
they offer, including credit, operational, Affairs, tel.: 202–622–4855, Assistant Affairs, tel.: 202–622–4855, Assistant
compliance, and reputation. Director for Sanctions Compliance & Director for Sanctions Compliance &
• All credit products should be Evaluation, tel.: 202–622–2490; or the Evaluation, tel.: 202–622–2490; or the
underwritten based on reasonable Department of the Treasury’s Office of Department of the Treasury’s Office of
policies and practices, including the Chief Counsel (Foreign Assets the Chief Counsel (Foreign Assets
guidelines governing the amounts Control), Office of the General Counsel, Control), Office of the General Counsel,
borrowed, frequency of borrowing, and tel.: 202–622–2410. tel.: 202–622–2410.
repayment requirements. SUPPLEMENTARY INFORMATION:
SUPPLEMENTARY INFORMATION:
OCC examiners will continue to Electronic Availability Electronic Availability
assess how banks offer short-term,
The list of Specially Designated
small-dollar loan products, including The list of Specially Designated
Nationals and Blocked Persons (SDN
whether management oversight is Nationals and Blocked Persons (SDN
List) and additional information
appropriate, whether risks posed by List) and additional information
concerning OFAC sanctions programs
third-party relationships are concerning OFAC sanctions programs
are available from OFAC’s Web site at
appropriately managed, and whether the are available from OFAC’s Web site at
http://www.treasury.gov/ofac.
product complies with applicable http://www.treasury.gov/ofac.
federal consumer protection statutes. Notice of OFAC Actions
Notice of OFAC Actions
The OCC will take appropriate action to
On June 6, 2017, OFAC removed from
address any unsafe or unsound banking On June 21, 2017, OFAC removed
the SDN List the person listed below,
practice or violations of law associated from the SDN List the person listed
whose property and interests in
with these products. below, whose property and interests in
property were blocked pursuant to
property were blocked pursuant to
Dated: October 5, 2017. Executive Order 13581.
Executive Order 13581.
Keith A. Noreika, Individual
Acting Comptroller of the Currency. Individual
[FR Doc. 2017–22012 Filed 10–11–17; 8:45 am]
1. BOTTCHER, Monica Elizabete
(a.k.a. BOTTCHER, Monica Elizabeth), 1. DRISCOLL, Mary Ann, Vancouver,
BILLING CODE 4810–33–P
45 Knock Rushen, Castletown, Isle of British Columbia, Canada; DOB 01 Jun
Man IM9 1TQ, United Kingdom; DOB 1950 to 30 Jun 1950; nationality Canada
3 See, e.g., Advisory Letter 2000–7, ‘‘Abusive
26 Feb 1973 (individual) [TCO] (Linked (individual) [TCO] (Linked To: CHEXX
Lending Practices’’; Comptroller’s Handbook,
To: PACNET BRAZIL; Linked To: INC.; Linked To: INDIAN RIVER (UK)
‘‘Deposit-Related Credit’’ (underwriting, credit LTD.; Linked To: PACNET GROUP).
administration, management oversight); OCC PACNET GROUP)
Bulletin 2010–16, ‘‘Guidance for Evaluating Capital
Dated: June 6, 2017. Dated: June 21, 2017.
asabaliauskas on DSKBBXCHB2PROD with NOTICES
Planning and Adequacy’’ (capital planning); OCC Andrea Gacki
Bulletin 2001–37, ‘‘ALLL Methodologies and Andrea Gacki,
Documentation’’ (ALLL); OCC Bulletin 2013–29, Acting Director, Office of Foreign Assets Acting Director, Office of Foreign Assets
‘‘Third-Party Relationships: Risk Management Control. Control.
Guidance,’’ as supplemented by OCC Bulletin
2017–21, ‘‘Third-Party Relationships: Frequently Editorial Note: This document was Editorial Note: This document was
Asked Questions to Supplement OCC Bulletin received at the Office of the Federal Register received at the Office of the Federal Register
2013–29.’’ The ‘‘Deposit-Related Credit’’ booklet,
on Friday, October 6, 2017. on Friday, October 6, 2017.
which provides guidance to and procedures for
examiners, will be revised to remove references to [FR Doc. 2017–22096 Filed 10–11–17; 8:45 am] [FR Doc. 2017–22097 Filed 10–11–17; 8:45 am]
the Guidance. BILLING CODE 4810–AL–P BILLING CODE 4810–AL–P
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Document Created: 2018-10-25 10:06:09
Document Modified: 2018-10-25 10:06:09
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| Action | Rescission of guidance. | |
| Dates | This Guidance is rescinded effective October 5, 2017. | |
| Contact | Paul Reymann, Director, Consumer Compliance Policy, (202) 649-5470; Steven Jones, Director, Retail Credit Risk, (202) 649-6220; Kenneth Lennon, Director, Community and Consumer Law, (202) 649-6350; Office of the Comptroller of the Currency, 400 7th Street SW., Washington, DC 20219 or, for persons who are deaf or hard of hearing, TTY, (202) 649-5597. | |
| FR Citation | 82 FR 47602 |
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