In March of this year, the Office of the Comptroller of the Currency (OCC) announced that it would no longer examine banks for reputational risk. On June 23rd, the Federal Reserve Board announced that it would follow suit, and reputational risk is no longer a component of its exams.

What does this mean for you?

• Reputational risk will no longer be considered a separate risk category in supervisory exams.
• The change is intended to improve clarity and consistency in exams and reduce subjectivity in supervisory ratings.
• Banks may face fewer regulatory surprises when making business decisions regarding banking cannabis-related businesses and FinTech.
• The decision promotes consistency across the agencies and helps banks with multiple regulators navigate exams more clearly.

Institutions should continue to manage reputational considerations carefully, as they may still indirectly influence overall risk assessments. If a reputational issue leads to customer attrition, lawsuits, or fraud, it may still influence exam outcomes—but in more concrete, measurable ways.

It is important to note that the FDIC has not officially removed Reputational Risk from its exams. A review was conducted of all references to “reputational risk” in its regulations, guidance, and exam manuals, and a rule is being prepared to eliminate it from its exam materials. However, for FDIC-regulated banks, this change has not yet been implemented.

You can access the Fed’s press release here.

CCI will continue to monitor these changes and provide updates as examiners implement this revised framework. You may reach out to us with any questions at inquiries@completecompli.com.

 

Victoria Peterson, CCBCO