ACA International Concludes 2020 Advocacy Efforts with Comments on Operation Choke Point; Federal Agencies’ Supervisory Guidance


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Comments reflect the need for clarity for regulated entities and support for rule to continue efforts to end Operation Choke Point and unfair termination of banking services.

12/28/2020 16:00

4 Minute Read

– Ending Operation Choke Point is one of ACA’s advocacy efforts, including work with Congress.

– In comments on a proposed rule from several federal regulators, ACA advocates for clarity for the industry through compliance resources.

ACA International, on behalf of members and the accounts receivable management (ARM) industry, filed comments urging the Consumer Financial Protection Bureau to draw clear distinctions between guidance and regulations as well as with the Office of the Comptroller of the Currency on Operation Choke Point and a proposed fair access rule.

Operation Choke Point

A new proposed rule announced by the Office of the Comptroller of the Currency (OCC) in November would ensure fair access to banking services for several industries—including debt collection—previously cut off during the controversial Obama-era program Operation Choke Point.

In Operation Choke Point, the Federal Deposit Insurance Corporation and U.S. Department of Justice (DOJ) reportedly applied pressure to financial institutions to cut off financial services to certain licensed, legally operating industries.

ACA has advocated for the end of Operation Choke Point by supporting legislation policy changes during the last several years and will keep moving forward with this advocacy on behalf of members impacted by the program.

In its comments on the proposed rule on fair access to financial services, ACA outlines how members continue to see their banking relationships terminated without notice or cause—as recently as this month. The comments support efforts by the OCC to clarify the obligation of large banks to provide fair access to financial services for legal entities consistent with the Dodd-Frank Act.

“Despite the fact that they are highly regulated, and their work helps ensure a functioning economy, ACA members have been unfairly targeted by Operation Choke Point and other similar efforts for the past several years, which have led to banking relationship terminations,” said ACA Vice President and Senior Counsel of Federal Advocacy Leah Dempsey in the comments.

“On numerous other occasions since the inception of Operation Choke Point, credit and collection professionals have had their banking relationships abruptly terminated, which has in certain instances threatened the existence of their businesses and their employees’ jobs, since in certain states a license to operate is reliant on having a banking relationship. ACA members continue to report unfair banking terminations across the country. Allowing individuals to pick winners and losers in the financial services marketplace, based on individual unresearched ideologies, is a very dangerous slippery slope, not just for ACA members but for all Americans,” Dempsey said. “Accordingly, ACA applauds the OCC for taking additional actions to address this very serious problem.”

Supervisory Guidance Comments

Several federal agencies issued a proposed rule in October on regulators’ supervisory guidance processes and to codify, with certain changes, a 2018 Interagency Statement Clarifying the Role of Supervisory Guidance.  

The FDIC, Board of the Governors of the Federal Reserve System, OCC, National Credit Union Administration, and the Consumer Financial Protection Bureau sought comments on the proposed rule, which would “confirm that the agencies will continue to follow and respect the limits of administrative law in carrying out their supervisory responsibilities.”

ACA submitted comments to the CFPB Dec. 28, noting the importance of clarity between regulations and supervisory guidance and the legal parameters and requirements surrounding their use.

“Clear rules are pertinent for ACA members and consumers, and ACA supports the bureau’s clarification that supervisory criticisms should continue to be specific as to practices, operations, financial conditions, or other matters that could have a negative effect on the safety and soundness of the financial institution, could cause consumer harm, or could cause violations of laws, regulations, final agency orders, or other legally enforceable conditions,” Dempsey said in the comments. “While ACA supports the ability to provide compliance clarifications through supervisory guidance, it should not be used as a tool to create new requirements or create a path for rulemaking through enforcement actions.”

There is a need for clear distinctions, in line with the Administrative Procedures Act, about the differences between regulations and supervisory guidance, Dempsey added, and all rulemaking should follow compliance with the Small Business Regulatory Enforcement Fairness Act.

ACA also supports supplementary actions like the issuance of frequently asked questions to help explain regulatory expectations and the use of formal advisory opinions.

The CFPB finalized its advisory opinions policy, which allows entities seeking to comply with regulatory requirements to submit a request for an advisory opinion to the bureau where uncertainty exists, in December, ACA previously reported.

“ACA fully understands and agrees that advisory opinions cannot rewrite rules. However, these opinions should be used to address difficulties in understanding compliance expectations,” Dempsey said.

Comments on Operation Choke Point and the supervisory guidance are due Jan. 4, 2021, and ACA expects final rules next year.

Related Content from ACA International:

Ending Operation Choke Point: Fair Access to Bank Services Addressed in Proposed Rule

Federal Agencies Propose Rule to Uphold Supervisory Guidance Processes

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