The Fair Audits and Inspections for Regulators’ (FAIR) Exams Act would establish reasonable exam timelines and appeals processes to help ensure a fair and effective supervisory process for banks

AFC applauds bipartisan and bicameral legislation by Representatives French Hill (R-AR) and David Scott (D-GA) and U.S. Senators Jerry Moran (R-KS) and Joe Manchin (D-WV)

Washington, D.C. (May 22, 2024) – The American Fintech Council (AFC), the premier industry association representing responsible fintech companies and innovative BaaS banks who deliver critical access to safe and affordable financial services, has announced its continued support for The Fair Audits and Inspections for Regulators’ (FAIR) Exams Act. The bipartisan and bicameral legislation recently introduced by Congressman French Hill (R-AR)and Congressman David Scott (D-GA) in the House follows U.S. Senate introduction by Senator Jerry Moran (R-KS) and Senator Joe Manchin (D-WV). The legislation would increase transparency and accountability in bank examinations and create a robust appeals process for legitimate disagreements between financial institutions and their regulators.

“Innovative banks embracing responsible technology should beheld to the highest regulatory standard to ensure important consumer access but they should also be granted the opportunity for fair and efficient exams and appeals,” said Phil Goldfeder, Chief Executive Officer of the American Fintech Council. “AFC has consistently advocated for a clear and consistent regulatory framework that reflects industry developments and clarifies supervisory expectations for innovative financial services business models, products, and services.”

The proposed legislation would increase accountability in bank examinations by establishing an independent review and appeal process to resolve disagreements between banks and regulators and by hiring an independent director to review disputes and refer appeals to an administrative law judge .It would also require timely responses to bankers during exams and reduce examination burdens for financial institutions by establishing additional transparency and efficiency measures.

“The bank examination process is the first line of defense against threats to bank safety and soundness. Unfortunately, in the event of a bank having deficiencies in their examinations, poor responsiveness can result in smaller community banks running the risk of going out of business,” said Congressman David Scott (D-Georgia) in a recent statement.  “The bipartisan FAIR Exams Act will ensure fairness, accountability, and efficiency to the supervisory examination process. Establishing a stronger appeals process, specifically one to better support community banks, is critical to the stability of our banking system.”

“Banks deserve to experience a fair and efficient supervisory examination process,” said Congressman French Hill (R-Arkansas) in a recent statement. “The Fair Exams Act will allow any bank - including our community and rural banks in Arkansas - to appeal a supervisory determination through a third-party, independent director for review. My legislation is a win for the banking industry and greatly increases the transparency and fairness in the bank examination process.”

The legislation would also establish a new Office of Independent Examination Review to adjudicate appeals. This office would be led by an independent director appointed by the Federal Financial Institutions Examination Council (FFIEC) and would be required to report annually to Congress on the actions taken under this bill.

AFC recognizes the importance of not only developing clear and consistent regulatory frameworks, but also transparent and accountable examination processes. To accomplish these efforts, AFC has consistently and proactively engaged with state and federal financial services regulators to collaborate and discuss the benefits of innovative financial products and services.

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