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22 January 20214 minute read

Office of the Comptroller of the Currency pauses Fair Access to Financial Services Rule

On January 14, 2021, the Office of the Comptroller of the Currency (OCC) released its finalized OCC Rule 55.1 (the Fair Access Rule) to implement 12 U.S.C. § 1, which charges the OCC with assuring “fair access to financial services” and “fair treatment of customers” by national banks.  The Fair Access Rule, scheduled to take effect on April 1, 2021 has yet to be published in the Federal Register.  On January 20, 2021, President Biden issued a regulatory freeze to ensure that the President’s appointees or designees would have the opportunity to review any new or pending rules.  In further developments, on January 28, 2021, the OCC announced a pause in the publication of the Fair Access Rule in the Federal Register to allow the next confirmed Comptroller of the Currency to review the final rule and public comments. public comments. 

 The Fair Access Rule, if it becomes effective in its current form, would apply to “covered banks,” which are defined as entities regulated by the OCC (generally, national banks and federal savings associations) and have the ability to (A) raise the price a person has to pay to obtain an offered financial service from the bank or from a competitor or (B) significantly impede a person, or a person’s business activities, in favor of or to the advantage of another person.  If a bank has $100 billion or more in assets, a rebuttable presumption arises that the bank is a covered bank under the Fair Access Rule.

Under the Fair Access Rule, covered banks would be required to:

  1. make each financial service it offers available to all persons in the geographic market served by the covered bank on proportionally equal terms
  2. not deny any person a financial service the covered bank offers unless the denial is justified by such person’s quantified and documented failure to meet quantitative, impartial risk-based standards established in advance by the covered bank
  3. not deny, in coordination with any others, any person a financial service the covered bank offers.

According to the OCC, the Fair Access Rule merely codifies more than a decade of OCC guidance stating that in evaluating whether to provide services, banks should conduct risk assessment of individual customers, rather than making categorical decisions, often as a reaction to pressure from political advocates “whose policy objectives are served when banks deny certain categories of customers access to financial services.”

When the Fair Access Rule was proposed, however, it was quite controversial.  The OCC received approximately 35,700 comments on the proposal, of which 4,200 comments supported the proposal and 31,290 comments opposed the proposal (although approximately 28,000 of those comments were from letters collected by a single organization).  According to the OCC, a significant number of comments were concerned that the Fair Access Rule would prevent banks from considering environmental and social impact in lending decisions. 

The OCC responded that the rule is narrowly focused on requiring banks to make decisions on an individualized and objective basis, that environmental and other risks can still be incorporated consistent with such a principle-based approach, and that covered banks are not required to provide financial services to any particular person or industry. 

We expect that the Fair Access Rule will continue to be controversial and, if approved in its current form, is likely to spur future litigation by customers who contend they were unfairly denied financial services.  It may also hamper the ability of regulated institutions to deny financial services to specific customers based on individualized risks that are not directly addressed by existing standards, creating both litigation and regulatory risk.  This issue takes on particular relevance where specific customers may be engaged in business activities that are legal but disfavored by regulators or public opinion.

To learn more about the implications of this new regulation, please contact any of the authors or your DLA Piper relationship lawyer.

This alert was updated on February 2, 2021.