[Federal Register Volume 82, Number 196 (Thursday, October 12, 2017)]
[Notices]
[Pages 47602-47603]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-22012]


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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.

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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DATES: This Guidance is rescinded effective October 5, 2017.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.
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    \1\ 78 FR 70624 (November 26, 2013).
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    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.
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    \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).
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    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\
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    \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.
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    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:
    <bullet> All bank products should be consistent with safe and sound 
banking, treat customers fairly, and comply with applicable laws and 
regulations.
    <bullet> Banks should effectively manage the risks associated with 
the products they offer, including credit, operational, compliance, and 
reputation.
    <bullet> 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