NCUA, BCFP clarify supervisory guidance; updated truth in lending thresholds for 2019

Greetings Compliance friends! Football is finally back in full swing and all is right with the world! That’s not the only big news this week: On Tuesday, September 11, 2018, NCUA, together with the Bureau of Consumer Financial Protection, Federal Reserve, FDIC, and Office of the Comptroller of the Currency issued a joint statement clarifying the role of “supervisory guidance” and the regulators’ approach to such guidance. The explanation noted that supervisory guidance “does not have the force and effect of law” and that the agencies “do not take enforcement actions based on supervisory guidance.” Going forward, the agencies said they will limit the use of “numerical thresholds or other ‘bright-lines’ in describing expectations in supervisory guidance.” However, the bulletin also takes care to note that:

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. (Emphasis added.)

While the bulletin reinforces that guidance does not have the full weight of law as compared to statutes and regulations, this does not mean supervisory guidance does not matter as these documents still indicate an agency’s view of safe and sound practices. Operating outside of such guidance may lead to heightened scrutiny during an exam, and the bulletin does not change NCUA’s broad authority to examine federally insured credit unions as set forth in §1784 the Federal Credit Union Act.


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