The Fair Audits and Inspections for Regulators’ (FAIR) Exams Act would establish an appeals process and create a more timely and transparent examination to help ensure a fair and effective supervisory process for banks

AFC applauds introduction of bipartisan legislation by U.S. Senators Jerry Moran (R-KS), Joe Manchin (D-WV), Thom Tillis (R-NC), and Bill Hagerty (R-TN) and urge immediate passage‍

Washington, D.C. (December 19, 2023) – The American Fintech Council (AFC), the premier industry association representing responsible and innovative BaaS banks who deliver critical access to safe and affordable financial services, has announced its support for The Fair Audits and Inspections for Regulators’ (FAIR) Exams Act. The bipartisan legislation introduced by U.S. Senator Jerry Moran (R-KS) and co-sponsored by U.S. Senators Joe Manchin (D-WV), Bill Hagerty (R-TN), and Thom Tillis (R-NC), 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 are rightfully held to the highest standard of transparency, compliance and responsibility when offering safe products that are creating critical access to financial services.” said Phil Goldfeder, Chief Executive Officer of the American Fintech Council. “Regulators should be held to the same standard of excellence to protect the safety and integrity of the financial system. 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 should be free from bias and fair to bankers,” said Senator Jerry Moran (R-Kansas) in a recent statement. “This legislation will help bring much-needed transparency to the examination process to make certain all banks – particularly rural, community banks – are treated fairly and afforded due process through a rigorous appeals process.”

“An effective and fair examination process for financial institutions is vital to the health of our banking system and beneficial for consumers, especially in rural states like West Virginia,” said Senator Joe Manchin (D-West Virginia) in a recent statement.  “I’m proud to reintroduce the bipartisan FAIR Exams Act, which would ensure any bank or financial institution that undergoes a supervisory exam has an impartial third party that reviews these exam findings before regulatory agencies can take action against them. I encourage my colleagues on both sides of the aisle to support this commonsense bill to strengthen transparency in our financial institutions and increase accountability on agencies.”

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 the innovative financial products and services. Further, AFC has diligently worked with regulators to develop pragmatic regulatory frameworks that help ensure effective oversight of the modern banking system.

“AFC supports the FAIR Exams Act because it recognizes the issues our members experience and seeks pragmatic solutions by increasing the oversight authority of the Federal Financial Institutions Examination Council to ensure clear, consistent, and accountable examination processes throughout the federal regulatory system,” wrote Ian P. Moloney, SVP, Head of Policy and Regulatory Affairs, in AFC’s recent letter to Senators Moran and Manchin. “The pragmatic approach taken in the FAIR Exams Act reflects the policy aims of AFC and, if enacted, will significantly improve the examination process for the benefit of regulators, regulated entities, and the stability of the broader financial services industry.”