Regulatory Practice Letter 14-02 - Deposit Advance Products – Final OCC and FDIC Guidance
The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) (collectively, the “Agencies”), each released final guidance in November 2013 entitled “Guidance on Supervisory Concerns and Expectations Regarding Deposit Advance Products.” The final guidance is intended to ensure that banks are aware of a variety of safety and soundness, compliance, and consumer protection risks posed by deposit advance loans, as well as to supplement existing agency guidance on payday loans, subprime lending, and small dollar loans. The final guidance limits eligible consumers to one deposit advance loan per monthly statement and imposes a one-month cooling off period before a consumer can obtain a new deposit advance loan after repaying an earlier loan.
The final guidance is substantively the same as the proposal issued by both agencies on April 24, 2013 (please refer to Regulatory Practice Letter 13-11). However, the final form contains certain provisions that were amended to address concerns raised during the public comment period, including clarifying that eligibility and underwriting expectations will not require the use of credit reports and specifying that the guidance will apply to all deposit advance products, including products that are structured to resemble lines of credit.