BCFP, Fed, other agencies say “guidance” is not the same as law

The Bureau of Consumer Financial Protection (BCFP) and four other federal agencies this week issued a joint statement explaining the role of supervisory guidance for regulated institutions, clarifying that guidance does not have the same effect as law.

 The statement from the agencies—the Federal Reserve Board, the BCFP, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency—in addition to confirming that supervisory guidance does not have the force and effect of law, said the agencies do not take enforcement actions based on supervisory guidance.

The joint statement explains that supervisory guidance can outline the agencies’ supervisory expectations or priorities and articulate the agencies’ general views regarding appropriate practices for a given subject area.

The BCFP, with the prudential agencies, is generally responsible for regulating the offering and provision of consumer financial products or services under the federal consumer financial laws. The agencies issued this statement to explain the role of supervisory guidance and to describe the agencies’ approach to supervisory guidance.

"In some situations, examiners may reference (including in writing) supervisory guidance to provide examples of safe and sound conduct, appropriate consumer protection and risk management practices, and other actions for addressing compliance with laws or regulations," the agencies said in the statement.

They still might occasionally seek formal input on guidance documents, but this "does not mean that the guidance is intended to be a regulation or have the force and effect of law."

The regulators also said they would try not to issue multiple documents on the same topic.

POLITICO Pro reported Tuesday that the statement comes after Sen. Pat Toomey (R-Pa.) last year sought to prove that two different guidance documents technically qualified as a rule in their implementation, a claim backed up by the GAO.

That ultimately led Congress to overturn guidance from the BCFP outlining steps that lenders should take to address discrimination by auto dealers.

Since then, POLITICO Pro notes, officials at agencies like the Fed and OCC have said publicly that guidance is not binding. But lawmakers, including Rep. Blaine Luetkemeyer (R-Mo.), had called for them to affirm this in writing.