The legislation would ensure a fair and effective supervisory process for banks, it is suggested
The American Fintech Council (AFC), an organization that represents BaaS banks, has announced its support for the Fair Audits and Inspections for Regulators’ (FAIR) Exams Act.
Introduced by Senator Jerry Moran (R-KS) and co-sponsored by Senators Joe Manchin (D-WV), Bill Hagerty (R-TN), and Thom Tillis (R-NC), the FAIR Exams Act would increase transparency and accountability in bank examinations as well as create an 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 AFC.
“Regulators should be held to the same standard of excellence to protect the safety and integrity of the financial system,” he added.
Transparency and fairness in bank examinations
The proposed legislation would help increase accountability in bank exams through the establishment of an independent review and appeal process to resolve disagreements between banks and regulators as well as leading to the hiring of an independent director to review disputes and refer appeals to an administrative law judge.
It will also require bankers to respond timely during exams as well as reduce the burden on financial institutions through the establishment of additional measures for transparency and efficiency.
“The bank examination process should be free from bias and fair to bankers. 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,” said Moran in a statement.
“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 Moloney, SVP, head of policy and regulatory affairs, in a letter by AFC to the senators behind the legislation.
“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,” he said.
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