OCC Proposes Changes to Appeals Process on Supervisory Determinations

The Office of the Comptroller of the Currency ("OCC") proposed revised procedures for appeals of "material supervisory determinations" by OCC-supervised entities.

The OCC stated that the revisions are necessary to address the "low rate of appeals" and the "perception" that the current process lacks independence. The agency noted that only one percent of institutions currently avail themselves of the process, potentially due to fear of retaliation or the belief that the OCC rarely overturns its own findings. The OCC argued that a clearly articulated de novo standard and an independent board would "bolster confidence in the fairness" of the system.

The OCC explained that the proposed rulemaking would codify the appeals process into regulation and restructure it to "enhance the independence and efficiency of the appeals function." The new rule would replace the Ombudsman as the final decision-maker with a newly created "Appeals Board," comprised of the Chief National Bank Examiner and two external term appointees who are not current OCC employees. The OCC noted that the Appeals Board and Deputy Comptrollers would apply a "de novo standard of review," meaning they would consider the matter anew "as if no decision had been rendered below" and would not defer to the supervisory office's judgment.

The OCC highlighted the following reforms in the proposal: (i) expanding the definition of "supervised entity" to include uninsured national trust banks and stablecoin issuers; (ii) authorizing the Appeals Board to grant a stay of a supervisory decision pending appeal if the determination would impose costs but delaying it would not result in "immediate financial harm;" (iii) establishing an expedited 30-day review process for determinations related to "critically undercapitalized" designations; and (iv) shifting the Ombudsman’s role from decision-maker to a neutral liaison responsible for investigating claims of examiner retaliation.

Comments on the proposal must be submitted no later than 60 days after its publication in the Federal Register.