OCC Bulletin 2013-15| June 7, 2013
Bank Appeals Process: Guidance for Bankers
Chief Executive Officers of All National Banks and Federal Savings Associations, Federal Branches and Agencies, Department and Division Heads, All Examining Personnel, and Other Interested Parties
The Office of the Comptroller of the Currency (OCC) is revising the OCC's policy by which banks may appeal agency decisions and actions to provide additional guidance on appealable matters. This policy applies to national banks, federal savings associations, and federal branches and agencies (collectively, banks). This issuance replaces OCC Bulletin 2011-44, "Bank Appeals Process: Guidance for Bankers," dated November 1, 2011.i
The OCC's primary mission is to ensure that national banks and federal savings associations operate in a safe and sound manner, provide fair access to financial services, treat customers fairly, and comply with applicable laws and regulations. In fulfilling these responsibilities, the OCC maintains open and ongoing communication with both the institutions it supervises and certain affected persons. The agency also fosters the fair and equitable administration of the supervisory process.
The OCC Ombudsman operates independently from the bank supervision process and reports directly to the Comptroller of the Currency. With the prior consent of the Comptroller, the Ombudsman may stay any appealable agency decision or action during the resolution of an appealable matter. The Ombudsman also may report weaknesses in OCC policy to the Comptroller and make recommendations regarding changes in OCC policy.
The existence of a formal bank appeals process does not change the core policy of the OCC concerning dispute resolution, which is to resolve disputed issues in an informal, amicable manner. Banks are encouraged to contact the Ombudsman to discuss any agency policy, decision, or action that might develop into an appealable matter. The Ombudsman's objective in these cases is to seek a resolution to the dispute before it develops into an appeal. This avenue provides an opportunity for banks to resolve issues in the most efficient and expeditious manner possible. If banks cannot resolve disagreements through discussion, they are encouraged to seek a further review of the OCC decisions or actions that are in dispute. The OCC official involved in the dispute shall inform the bank of the informal and formal appeals process.
This bulletin establishes the process through which a bank can seek a review of agency supervisory decisions and actions. This process ensures that no one is disadvantaged by filing an appeal. A bank may always contact the Ombudsman with any questions regarding the appeals process. In addition, the Ombudsman is available for informal discussion or to act as a liaison between the OCC and any affected person or bank to resolve disputes resulting from the OCC's regulatory activities. Interested parties shall direct all communications with the Ombudsman to the following address:
Office of the Ombudsman
Office of the Comptroller of the Currency
400 7th Street SW
Washington, DC 20219
Phone: (202) 649-5530; Fax: (202) 649-5727
Except as otherwise provided below, a bank may appeal any agency supervisory decision or action to its supervisory office or to the Ombudsman, including but not limited to the following:
- Examination ratings.
- Adequacy of the allowance for loan and lease loss methodology.
- Individual loan ratings.
- Violations of law.
- Shared National Credit (SNC) decisions.
- Fair-lending-related decisions.
- Licensing decisions.
- Material supervisory determinations such as matters requiring attention, compliance with enforcement actions, or other conclusions in the report of examination (ROE).
While banks may not appeal a decision by the supervisory office to pursue a formal enforcement-related action, banks may appeal conclusions in the ROE. However, in such circumstances, the appeal is limited to a consideration of whether the examiners appropriately applied agency policies and standards. If a bank disagrees with the agency decision to pursue a formal enforcement action, the bank can contest the action through the administrative process. Once a bank has entered into a formal enforcement action, conclusions regarding the bank's level of compliance with the formal enforcement action are an appealable matter. However, if the OCC determines that the lack of compliance with an existing enforcement action requires additional enforcement action, the proposed new enforcement action is not appealable.
Matters That May Not Be Appealed
A bank may not appeal the following matters to the Ombudsman or the bank's supervisory office:
- Appointments of receivers and conservators.
- Preliminary examination conclusions communicated to the bank before a final ROE or other written communication from the OCC is issued (bank management is encouraged to discuss any concerns or disagreements regarding these conclusions with their examiner-in-charge (EIC) or supervisory office).
- Any formal enforcement-related actions, ii including, but not limited to, decisions to (a) seek the issuance of a formal agreement or a cease-and-desist order, or the assessment of a civil money penalty pursuant to section 8 of the Federal Deposit Insurance Act (FDIA); (b) take prompt corrective action pursuant to section 38 of 12 USC 1831(o); (c) issue a safety and soundness order pursuant to section 39 of the FDIA (12 USC 1831p-1); or (d) commence formal investigations pursuant to 12 USC 481, 1818(n), and 1820(c), and 12 USC 1464(d).
- Formal and informal rulemakings pursuant to the Administrative Procedure Act (APA), 5 USC 500 et seq.
- Decisions or recommended decisions following formal and informal adjudications conducted pursuant to the APA, 5 USC 701 et seq.
- Requests for agency records or information under the Freedom of Information Act covered by 5 USC 552 or 12 CFR 4 and submission of information to the OCC that is governed by this statute and this regulation.
- Decisions to disapprove directors and senior executive officers pursuant to section 914 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) (12 USC 1831i).iii
- Any other agency decisions that are subject to judicial review other than those described in the appealable matters section of this document.
A formal enforcement-related action or decision takes effect when a supervision review committee recommends or determines that the OCC will pursue a formal action under applicable statutes, regulations, or published enforcement-related policies of the OCC and at that point is no longer subject to appeal. Remarks in an ROE and other communications about a potential formal enforcement action made prior to a supervision review committee decision are preliminary and therefore may not be appealed. Enforcement policies include the OCC's Enforcement Action Policy (PPM 5310 3 (REV)), Civil Money Penalty Policy (PPM 5000-7 (REV)), Enforcement Policy Statement on Civil Money Penalties (RB 18-3b), and Securities Activities Enforcement Policy (PPM 5310-5). These publications are available on request from the OCC's Communications Division, 400 7th Street SW, Washington, DC 20219; or by telephone at (202) 649-6700.
An inquiry is usually verbal information gathering about a specific topic and related standards or the appeals process; it occurs any time during the examination cycle.
A formal discussion represents communication between the supervisory office and a bank after the supervisory office receives written communication from the bank informing the supervisory office of its disagreement with preliminary supervisory conclusions based on a draft ROE, matters requiring attention, loan classifications, etc.
An informal appeal represents written communication to the bank's supervisory office or signatory on the agency decision expressing disagreement with final, written conclusions; it occurs after receipt of an ROE or other written decision.
A formal appeal represents written communication to a Deputy Comptroller or the Ombudsman expressing disagreement with the final supervisory conclusions. A formal appeal must have board approval. A bank may appeal to the Ombudsman after filing an appeal with a Deputy Comptroller or the SNC appeals panel if applicable; this appeal is referred to as second-tier appeal.
Any communication between a Deputy Comptroller or the Ombudsman and the bank at any time prior to filing a formal appeal is considered a formal discussion.
Informal Appeals Activities
In keeping with the OCC's core philosophy of resolving disputes arising from bank supervision actions and decisions in a fair and expeditious manner, banks are encouraged to discuss matters of disagreement with their supervisory office prior to receiving final written confirmation of the issue in dispute. Preliminary conclusions include written conclusions presented to the bank in draft form.
The objective of an inquiry or formal discussion is to seek an agreeable resolution before the issue in dispute develops into an informal or formal appeal. If banks and their supervisors cannot resolve their differences during the formal discussion stage after receipt of draft supervisory conclusions, banks may file an informal appeal with their supervisory office Assistant Deputy Comptroller, Director for Special Supervision, or Large Bank EIC within 10 days of receiving the agency's final written decision. The supervisory office shall respond in writing to the appeals within 10 days of receipt.
If banks disagree with the outcome of the informal appeal, they can file a formal appeal with the appropriate Deputy Comptroller or the Ombudsman as further described below. The choice of where to file a formal appeal is at the banks' discretion. If a bank files an appeal with its appropriate Deputy Comptroller and disagrees with the outcome, the bank may file for an additional review of the disputed matter directly with the Ombudsman.
Formal Appeals Activities
Banks may seek review of appealable matters by filing a formal appeal with either the appropriate Deputy Comptroller or the Ombudsman. With the exception of disputes arising from SNCs or matters relating to fair lending and section 914 of FIRREA, which are addressed later in this bulletin, procedures for filing formal appeals are outlined below.
Appeals to the Deputy Comptroller
A formal appeal to the Deputy Comptroller shall be filed with the Deputy Comptroller responsible for the unit that issued the decision or action in dispute.
Banks filing an appeal with the appropriate Deputy Comptroller shall submit information in writing fully describing the matter in dispute and the basis for the bank's disagreement. To ensure that a bank's board of directors supports the appeal, the bank's president or chief executive officer must submit the appeal and include in the submission the board's approval of the action. Banks requesting an appeal must file their appeal within 60 days of receipt of the final written agency decision in dispute. The appeal also must include the supervisory standards (that is, a legal citation, a supervisory issuance, etc.) that the bank deems were inappropriately applied by OCC officials. Upon receiving the appeal, the Deputy Comptroller contacts the bank to discuss the appeals process and applicable supervisory standards related to the issue(s) in dispute, and to ensure that he or she has all the information needed to determine if the issue(s) in dispute are appealable. However, if the Deputy Comptroller directly or indirectly participated in making the decision under review, he or she must transfer the appeal to the Ombudsman after advising the appellant. The same is true if he or she directly or indirectly reports to the agency official who made the decision under review.
Within seven days of receiving a formal appeal, the Deputy Comptroller shall notify the bank in writing whether the appeal has been accepted based on the acceptance criteria set forth in this bulletin. If the Deputy Comptroller accepts an appeal, that official contacts the OCC management official(s) involved in the dispute to submit a written response to the appeal. The supervisory office may request a conference with the Deputy Comptroller to discuss the appeals process and applicable supervisory standards related to the issue in dispute to ensure the response contains all the necessary materials.
In the absence of any extenuating circumstances, the Deputy Comptroller will issue an appeals decision letter within 45 days. Immediately after issuing a decision letter, the Deputy Comptroller will forward to the Ombudsman copies of all relevant materials considered in the preparation of the decision letter, including all written submissions by the bank.
If a bank disagrees with the response from the Deputy Comptroller, the bank may further appeal the matter to the Ombudsman. The appeals decision letter from the Deputy Comptroller to the bank must notify the bank of this option. The bank must file this second-tier appeal with the Ombudsman within 15 days of receiving the decision letter from the Deputy Comptroller.
Appeals to the Ombudsman
A formal appeal to the Ombudsman may arise from the following sources: (1) appeals filed directly with the Ombudsman, (2) second-tier appeals of Deputy Comptroller decisions, (3) Shared National Credit appeals decisions, (4) fair lending determinations, and (5) licensing decisions.
Similar to a Deputy Comptroller appeal, a bank filing an appeal directly with the Ombudsman must submit information in writing fully describing the matter in dispute and the basis for the bank's disagreement. To ensure that a bank's board of directors supports the appeal, the bank's president or chief executive officer must submit the appeal and include in the submission the board's approval of the action. The appeal also shall include the supervisory standards that the bank deems were inappropriately applied by OCC officials. Banks shall file an appeal within 60 days of receiving the final written agency decision in dispute.
Upon receiving the appeal, the Ombudsman will contact the bank to discuss the appeals process and supervisory standards related to the issue in dispute and to ensure that the Ombudsman has all relevant materials. Within seven days of receiving a formal appeal, the Ombudsman will notify the bank whether the appeal has been accepted. If the Ombudsman officially accepts an appeal based on the acceptance criteria described earlier in this bulletin, he or she will contact the OCC management official(s) involved in the dispute to submit a written response to the appeal. The supervisory office may request a conference with the Ombudsman to discuss the appeal process and supervisory standards related to the issue in dispute, and to ensure the response contains all relevant material.
In the absence of any extenuating circumstances, the Ombudsman will issue a written response to the appeal within 45 days.
If a bank disagrees with the decision rendered through a Deputy Comptroller appeal or SNC appeals panel (discussed further in this section), it may further appeal the matter to the Ombudsman. Banks must file written notice of this second-tier appeal within 15 days of receiving the decision letter from the appropriate Deputy Comptroller.
Upon receipt, the Ombudsman shall review any material considered in the appeals response, including information submitted by the appellant at the time of the appeal and any other information considered in making the appeals decision. The Ombudsman will contact the bank to ensure that the OCC is in possession of all relevant material. If requested by either OCC management involved in the appeal or a senior official of the bank filing the appeal, the Ombudsman will arrange to discuss issues in dispute and applicable supervisory standards. In the absence of any extenuating circumstances, the Ombudsman will issue a written response to the second-tier appeal within 45 days of acceptance. When the Ombudsman is recused from reviewing the decision under appeal due to a potential conflict of interest, the Comptroller will transfer the appeal to a senior official within the agency.
Shared National Credits
Bank senior management shall notify the EIC assigned to the bank if it disagrees with a decision rendered through the SNC program. If the bank and the examining team are unable to resolve the disagreement through informal discussion, the bank may formally appeal the decision to its Deputy Comptroller for Large Bank Supervision.
Who may submit an SNC appeal: An agent bank may submit an SNC appeal directly or on behalf of any participant bank. If the agent bank refuses, for whatever reason, to file the appeal on behalf of the bank group, Large Bank Supervision will accept an appeal from any participating bank. A bank must file an SNC appeal with the regulator that supervises the agent bank. Therefore, if a state member bank is a participant in a credit for which a bank subject to OCC jurisdiction is the agent, the state member bank must file its appeal with the OCC. Conversely, if a bank is a participant in a credit for which a state member bank is the agent, the bank must file its appeal with the Board of Governors of the Federal Reserve. When no agent bank is named, the appeal shall be filed with the regulator that supervises the bank at which the SNC was reviewed. To ensure that a bank's senior management supports the appeal, the chief executive officer of the appealing bank must submit all SNC appeals.
Timing of SNC appeals: The agent bank shall file an SNC appeal within 14 days of notification by the EIC of the preliminary disposition of the credit. Notification occurs when the EIC gives the bank the preliminary notification letter at the conclusion of the SNC review process. Any participant bank can appeal either through the agent bank or on its own within 14 days of receiving the preliminary SNC results from the agent bank. If the agent bank does not provide preliminary results, participant banks may file an appeal within 14 days of receiving the official SNC results from the primary regulator. Large Bank Supervision will evaluate the reasonableness of an appeal delayed by extenuating circumstances on a case-by-case basis. The SNC preliminary notification letter authorizes agent or review banks, at their option, to notify participating banks of the preliminary disposition of each credit.
The SNC report is issued annually to banks participating in the SNC program at the end of each SNC review. Because of processing deadlines, the report may not reflect decisions on SNC appeals submitted beyond the initial 14-day filing period. In such cases, Large Bank Supervision will send a supplemental letter to each participating bank notifying it of the results of the appeal. The letter will also communicate any necessary revisions to each bank's report of SNCs.
SNC appeals letter: In drafting an SNC appeals letter, senior bank management shall explain why it disagrees with the SNC decision. The SNC appeals letter must identify the credit, the commitment amount, the disposition, the basis for the bank's disagreement, and any documentation that supports management's position on the matter(s) in dispute. Banks shall address all SNC appeals to the appropriate Deputy Comptroller for Large Bank Supervision, Office of the Comptroller of the Currency, Washington, DC 20219.
SNC appeals processing: Upon receipt of an SNC appeal, the appropriate Deputy Comptroller for Large Bank Supervision will immediately acknowledge receipt by letter to the chief executive officer of the bank filing the appeal. Large Bank Supervision will normally forward a copy of the appeals letter and supporting information to the voting team that confirmed the loan rating within three days of receipt. The voting team will then confirm the accuracy of the facts presented in the appeals letter.
The Deputy Comptroller for Large Bank Supervision will forward a copy of the SNC appeal to the EIC of the agent bank. Each individual shall provide his or her formal comments and opinions to the appropriate Deputy Comptroller for Large Bank Supervision within 10 days of receipt of the appeal. A Deputy Comptroller for Large Bank Supervision will normally grant requests by bank management for a meeting to discuss the issues in dispute.
An interagency panel consisting of senior credit examiners that are independent of the original voting team will evaluate the appeal and recommend a decision to senior management. (Senior management of the appropriate agency has final authority.) Large Bank Supervision normally concludes the entire SNC appeals process within 30 days of receipt. Immediately after issuing a decision letter, the appropriate Deputy Comptroller for Large Bank Supervision will forward to the Ombudsman copies of all relevant materials considered in preparation of the response, including all written submissions by the bank. If a bank disagrees with the decision rendered through the SNC appeals process, it may further appeal the matter to the Ombudsman. The appeals decision letter from the Deputy Comptroller to the bank must notify the bank of this option. The bank must file written notice of this second-tier appeal to the Ombudsman within 30 days of receiving the decision letter from the Deputy Comptroller for Large Bank Supervision.
For more information concerning the appeal of an SNC decision, please contact the Headquarters SNC Program Manager in Large Bank Supervision at (202) 649-6210.
Matters Related to Fair Lending
When the OCC has made a determination that there is reason to believe an instance or pattern or practice of discrimination exists that will result in either a referral to the U.S. Department of Justice or notification to the U.S. Department of Housing and Urban Development, the Senior Deputy Comptroller for Midsize and Community Bank Supervision or the Senior Deputy Comptroller for Large Bank Supervision (whichever oversees the bank) will provide written notice to the bank of this finding. Banks may file an appeal to the Ombudsman for reconsideration of this decision within 15 days of the date of this notice.
Section 914 of FIRREA
Issues in dispute relating to section 914 of FIRREA, are not appealable to a supervisory office or the Ombudsman. The following procedures describe the appeals process designated for decisions relating to disapproval of a candidate's application to become a member of a bank's board of directors or a senior executive officer of a bank.
If a candidate's application to become a member of the board of directors or a senior executive officer of a bank is disapproved, the disapproval letter will state why the candidate was not accepted. Within 15 days of receiving this letter, the bank or the unsuccessful candidate may submit an appeal for review by the Comptroller. The appeal must state why the reasons for disapproval are contrary to fact or insufficient to justify disapproval. Supporting documentation shall be attached.
The Comptroller, or an authorized designee not previously involved in the disapproval, will evaluate and make a final determination on the appeal. The appeal will be granted and the disapproval overturned if the reasons given for the disapproval are ruled contrary to fact or insufficient to justify the disapproval.
As a matter of procedure, the bank or proposed person shall file the appeal with the bank's supervisory office. The supervisory office will forward the appeal directly to the Comptroller or authorized designee for review.
Within 45 calendar days, the Comptroller or his or her authorized designee will notify the appellant in writing of the decision. If the original decision is overturned, the appellant can assume the position in the bank. Otherwise, the bank can propose another person or leave the position vacant, if appropriate.
Effect of Filing a Formal or Informal Appeal
As a general matter, decisions and actions in dispute are not stayed during the pursuit of an appeal. In the appropriate circumstances, however, the Ombudsman or the appropriate OCC official, upon written request of a bank, may relieve the bank of the obligation to comply with a supervisory decision or action while the supervisory appeal is pending.
Follow-Up by the Ombudsman
After the appropriate OCC official renders a decision on a formal appeal, the Ombudsman will contact the bank to ask whether the bank believes OCC examiners have taken actions against the bank in retaliation for its appeal. The Ombudsman will contact bank management (1) 60 days after the date of the decision letter and (2) 60 days after completion of the first examination of the appellant bank following its appeal. A bank may also contact the Ombudsman any time during or after the appeal if the bank believes that retaliation has occurred.
If a bank claims that retaliatory actions have taken place, the Ombudsman will investigate the complaint. In the absence of extenuating circumstances, the Ombudsman will complete the investigation within 30 days. If the Ombudsman finds that retaliation has occurred, he or she will forward the complaint directly to the Inspector General. Appropriate action, including disciplinary action consistent with OCC policies, will be taken as warranted. In addition, to prevent future retaliation, the Ombudsman may recommend to the Comptroller that the next examination of the bank exclude personnel involved in the ruling appealed by the bank. The Comptroller will make the final decision on any such exclusion.
Liaison Activity of the Ombudsman
In addition to evaluating formal appeals brought by banks, the Ombudsman can provide assistance with any problem or question the party may have in dealing with the OCC resulting from the OCC's regulatory activities. The Ombudsman either provides the requested information or directs the person to the appropriate point of contact. In so doing, the Ombudsman ensures that safeguards exist to encourage persons to come forward and to preserve the confidentiality of those seeking information or identifying a concern.
Thomas J. Curry
Comptroller of the Currency
i 12 USC 4806 required the OCC, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, the Federal Reserve Board, and the National Credit Union Administration to establish an intra-agency appellate process for the review of "material supervisory determinations" made by agency officials.
ii For purposes of this issuance, a formal enforcement-related action or decision includes the underlying facts that form the basis of a recommended or pending formal enforcement action and the acts or practices that are the subject of a pending formal enforcement action.
iii Appeals of section 914 of FIRREA, while not appealable to the Ombudsman, are appealable to the Comptroller or a designee. Detailed appeals procedures can be found in the Comptroller's Licensing Manual booklet titled "Changes in Directors and Senior Executive Officers" and elsewhere in this bulletin.