In response to proposed rulemaking, AFC letter recommends clear standards for distinguishing substantive violations from technical deficiencies and ensuring proportionate supervisory responses

Washington, D.C. (October 1, 2026) – The American Fintech Council (AFC), the largest industry association representing both responsible fintech companies and innovative banks, submitted a comment letter to the Office of the Comptroller of the Currency (OCC) in response to its proposed rule regarding violations of laws or regulations. AFC supports the OCC’s effort to establish a clear framework for distinguishing substantive violations from technical deficiencies and recommends refinements to ensure that heightened supervisory attention is focused on violations that present meaningful legal, financial, or customer risk.

“The OCC’s proposal presents an important opportunity to bring greater clarity and proportionality to the supervisory process,” said Phil Goldfeder, CEO of the American Fintech Council. “Establishing clear and objective standards for when a violation warrants a certain level of supervisory response can help ensure institutions and regulators remain focused on the issues that pose the most consequential risks.”

In its letter, AFC recommends that the OCC strengthens the proposed framework by requiring substantive classifications to be grounded in demonstrable materiality and ensuring that findings involving patterns or systemic issues are supported by evidence of a meaningful and recurring deficiency. AFC also recommends preserving the “banking or banking-related” limitation and applying institution-specific factors to assess materiality without creating different substantive standards across institutions.

“A violation should be treated as substantive when, viewed in context, it has produced or could reasonably be expected to produce a material consequence for the institution, its customers, or the integrity of its financial records,” said Ian P. Moloney, Chief Policy Officer of the American Fintech Council. “A risk-based framework should give examiners the tools to identify significant compliance concerns while allowing institutions appropriate flexibility to correct technical deficiencies through their existing compliance programs. We encourage the OCC to build on this proposal by establishing workable standards that promote consistency and proportionate supervision.”

AFC also recommends that the OCC provide a clear written basis for substantive violation classifications and establish meaningful supervisory review for institutions that dispute a violation or its classification. These measures would promote greater consistency and transparency while ensuring that supervisory responses remain proportionate to the underlying risk.

A standards-based organization, the American Fintech Council (AFC) is the largest and most diverse trade association representing financial technology (fintech) companies and innovative banks. On behalf of nearly 175 member companies and partners, AFC promotes a transparent, inclusive, and customer-centric financial system by supporting responsible innovation in financial services and encouraging sound public policy. AFC members foster competition in consumer finance and pioneer products to better serve underserved consumer segments and geographies.

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