2022 is just around the corner! As we enter a new year, compliance remains a priority as financial institutions try to determine what to expect from regulators in the days to come. The FDIC and the OCC have recently released guidance to provide financial institutions with some of the areas in which they can expect to see some focus. Their guidance includes their priorities for the upcoming year and for the next few years to follow.
The FDIC released their strategic plan for 2022-2026 which outlines several strategic challenges on the horizon. One of the main focal points covered among the strategic challenges is the country’s economic status as it slowly continues to recover from a global wide pandemic. The FDIC states that ““while the banking industry continues to perform well, the interest rate environment and economic uncertainty continue to pose challenges for many institutions. Overall, the industry must manage interest-rate risk, liquidity risk, and credit risk carefully to remain on a long-term, sustainable growth path.” The goal of the FDIC has always been and remains to be focused on ensuring that depositors are protected against loss, safe and sound banking practices, consumer protections, and communities. Other strategic challenges are also addressed among the FDIC’s strategic priorities such as nonbank competition with community and regional banks, innovation, information technology and cybersecurity, economic inclusion, and workforce development and management.
The OCC set forth their supervisory priorities and objectives for the fiscal year 2022 which begins October 1, 2021, and end September 30, 2022. The fiscal year 2022 Bank Supervision Strategy Planning Guidance outlines supervision priorities which align with the OCC’s Strategic Plan for 2019-2023. One of the first areas of focus noted is safety and soundness of strategic and operational planning which include “guarding against complacency”. The OCC notes that examiners will ensure that “banks remain vigilant when considering growth and new profit opportunities and will assess management’s and the board’s understanding of the impact of new activities on the bank’s financial performance, strategic planning process, and risk profile”. The OCC outlines it top examination concerns as cybersecurity, vendor management, BSA (Bank Secrecy Act), consumer compliance, and fair lending and CRA (Community Reinvestment Act), all areas of focus in the past. New areas of focus include payment products and services, fintech and cryptocurrency, and climate.
Financial institutions are familiar with and are not likely to be surprised by the vast majority of supervisory priorities among both the FDIC and the OCC. It is however, critical that financial institutions pay particularly close attention to the newer areas of focus or those areas which were not typically priorities among the agencies in past years. This means becoming familiar with the agencies’ expectations, discussing with the bank’s Board of Director’s and senior management, and reviewing compliance programs to ensure that you are prepared and in compliance.