The American Fintech Council (AFC) this week announced its support for The Fair Audits and Inspections for Regulators’ (FAIR) Exams Act. The organization said bipartisan legislation introduced by U.S. Sen. Jerry Moran (R-KS) and co-sponsored by U.S. Sens Joe Manchin (D-WV), Bill Hagerty (R-TN), and Thom Tillis (R-NC), would increase transparency and accountability in bank examinations and create a robust appeals process for legitimate disagreements between financial institutions and their regulators.
“Innovative banks are rightfully held to the highest standard of transparency, compliance and responsibility when offering safe products that are creating critical access to financial services,” said Phil Goldfeder, chief executive officer of the American Fintech Council. “Regulators should be held to the same standard of excellence to protect the safety and integrity of the financial system. AFC has consistently advocated for a clear and consistent regulatory framework that reflects industry developments and clarifies supervisory expectations for innovative financial services business models, products, and services.”
The proposed legislation increases accountability in bank examinations by establishing an independent review and appeal process to resolve disagreements between banks and regulators and by hiring an independent director to review disputes and refer appeals to an administrative law judge. It would also require timely responses to bankers during exams and reduce examination burdens for financial institutions by establishing additional transparency and efficiency measures.
“The bank examination process should be free from bias and fair to bankers,” said Moran. “This legislation will help bring much-needed transparency to the examination process to make certain all banks – particularly rural, community banks – are treated fairly and afforded due process through a rigorous appeals process.”
“An effective and fair examination process for financial institutions is vital to the health of our banking system and beneficial for consumers, especially in rural states like West Virginia,” said Manchin. “I’m proud to reintroduce the bipartisan FAIR Exams Act, which would ensure any bank or financial institution that undergoes a supervisory exam has an impartial third party that reviews these exam findings before regulatory agencies can take action against them. I encourage my colleagues on both sides of the aisle to support this commonsense bill to strengthen transparency in our financial institutions and increase accountability on agencies.”
The American Fintech Council said it recognizes the importance of not only developing clear and consistent regulatory frameworks but also transparent and accountable examination processes. To accomplish this, they said they have consistently and proactively engaged with state and federal financial services regulators to collaborate and discuss the benefits of innovative financial products and services. The organization added it has “diligently worked with regulators to develop pragmatic regulatory frameworks that help ensure effective oversight of the modern banking system.”
“AFC supports the FAIR Exams Act because it recognizes the issues our members experience and seeks pragmatic solutions by increasing the oversight authority of the Federal Financial Institutions Examination Council to ensure clear, consistent, and accountable examination processes throughout the federal regulatory system,” said Ian P. Moloney, SVP, head of policy and regulatory affairs, in the American Fintech Council’s recent letter to Moran and Manchin. “The pragmatic approach taken in the FAIR Exams Act reflects the policy aims of AFC and, if enacted, will significantly improve the examination process for the benefit of regulators, regulated entities, and the stability of the broader financial services industry.”