OCC Overhauls Bank Supervision Policies to Focus on Material Financial Risks

The Office of the Comptroller of the Currency (OCC) has overhauled its supervisory framework, shifting focus toward material financial risks and substantive legal violations. For fintechs and banks, this move signals a more predictable enforcement environment where regulatory scrutiny is tailored to an institution's size and complexity, potentially reducing the burden of non-financial compliance for smaller players.

What was announced

The OCC has substantially revised its policies and procedures manuals (PPMs) regarding enforcement actions and Matters Requiring Attention (MRAs). Central to this update is the revision of PPM 5310-3, “Bank Enforcement Action and Related Matters,” which now emphasizes three guiding principles: escalation, tailoring, and focusing corrective actions on deficiencies essential to safety and soundness. Notably, the OCC will now apply higher regulatory expectations to large or complex banks, meaning practices that trigger enforcement for a major institution might not result in the same action for a community bank.

Furthermore, the agency has publicly released PPM 5400-11, “Matters Requiring Attention,” for the first time. This document clarifies that MRAs will only be issued for specific failures that meet defined standards and must be tailored based on financial risk factors. Alongside these manuals, the OCC has proposed a new rule to categorize legal violations as either “substantive” or “technical.” Substantive violations will remain the focus of MRAs, while technical violations—those with less impact on customers or the institution—may be addressed through other mechanisms. This proposal is open for public comment for 30 days following its publication in the Federal Register. These steps follow previous efforts to eliminate reputation risk from examinations, modernize the regulatory capital framework, and deliver the Administration’s vision of Parallel Prosperity for Main Street and Wall Street.

"Today, the OCC is taking a number of historic steps to codify the agency’s return to risk-based supervision, helping to ensure that its more reasonable, intentional approach to bank supervision endures. It is critical that examiners and institutions prioritize material financial risks and substantive violations of law over concerns related to policies, process, documentation, and other nonfinancial risks, and that the agencies’ supervision and enforcement standards further that prioritization."

Jonathan V. Gould, Comptroller of the Currency at the Office of the Comptroller of the Currency.

The companies involved

The Office of the Comptroller of the Currency (OCC) is a primary regulator of the U.S. banking system, responsible for chartering, regulating, and supervising all national banks and federal savings associations. As an independent bureau of the U.S. Department of the Treasury, it ensures that national banks operate in a safe and sound manner and provide fair access to financial services. The agency’s influence is significant, as it oversees the largest and most complex financial institutions operating in the United States.

Working alongside the OCC on this initiative is the Federal Deposit Insurance Corporation (FDIC). The FDIC is an independent agency created by Congress to maintain stability and public confidence in the nation's financial system. It provides deposit insurance to depositors in U.S. commercial banks and savings institutions and serves as the primary federal regulator for state-chartered banks that do not join the Federal Reserve System. Together, these agencies form the backbone of federal banking oversight, and their joint final rule regarding unsafe or unsound practices represents a unified front in shifting the industry toward a risk-based supervisory model.

What FF News has reported before

The OCC’s shift toward a risk-based approach comes as the agency continues to evaluate new entrants into the national banking space. FF News recently reported that Revolut Secures Conditional OCC Approval for U.S. National Bank Charter, a major milestone for the fintech giant’s American expansion. Similarly, Itaú Unibanco Secures Preliminary OCC Approval for US National Bank Charter, highlighting the agency's role in vetting international players.

In the broader market, FF News has tracked the movement of established institutions, such as when American Savings Bank Files for IPO: Hawaii-Based Lender Targets NYSE Listing Under Symbol ASBH. Additionally, the intersection of traditional banking and digital assets remains a focal point, as seen in the report on World Liberty Financial Launches USD1 Stablecoin on Canton Network for Institutional RWA Settlement.

What this means

This pivot by the OCC represents a significant de-escalation in the “regulation by paperwork” era that has frustrated the banking sector for years. By explicitly distinguishing between substantive and technical violations, the regulator is placing the burden of proof back on the materiality of risk rather than procedural perfection. This puts pressure on examiners to justify enforcement actions through the lens of financial stability rather than checklist compliance. For the industry, the move raises questions about how “technical” a violation must be to escape an MRA, and whether this newfound transparency will truly prevent the inconsistent application of rules across different regional offices.