Policy Statement

PRA Publishes Policy Statement on Internal Governance of Third Country Branches

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The U.K. Prudential Regulation Authority (PRA) has issued a policy statement on the internal governance arrangements of U.K. branches of non-EEA banks and PRA designated investment firms, known as “third country branches.”

The rules and supervisory statement cover general organizational requirements; persons who effectively direct the business; responsibility of senior personnel; skills, knowledge and expertise; compliance and internal audit; risk control; outsourcing; and record keeping. These rules replace the rules and guidance in chapters 4 to 9, and 21, of the Senior Management Arrangements, Systems and Controls section of the PRA Handbook. The rules will come into effect on 7 March 2016. Press release.

Bureau of Consumer Financial Protection Issues Policy on No-Action Letters

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On February 18, the Consumer Financial Protection Bureau issued a new policy statement on No-Action Letters.

Under the Policy, Bureau staff, in its discretion, would issue no-action letters (NALs) to specific applicants in instances involving “innovative financial products or services that promise substantial consumer benefit where there is substantial uncertainty whether or how specific provisions of statutes implemented or regulations issued by the Bureau would be applied.”

A NAL would advise the recipient that, subject to its stated limitations, the staff has no present intention to recommend initiation of an enforcement or supervisory action against the requester with respect to a specified matter. However, NALs would be subject to modification or revocation at any time at the discretion of the staff, and may be conditioned on particular undertakings by the applicant with respect to product or service usage and data-sharing with the Bureau. Also, NALs would be nonbinding on the Bureau, and would not bind courts or other actors who might challenge a NAL recipient’s product or service, such as other regulators or parties in litigation.

Federal Reserve Proposes to Expand the Applicability of Board’s Small Bank Holding Company Policy Statement

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On January 29, Federal Reserve Board (Fed) invited public comment on a proposed rule to expand the applicability of the Board’s Small Bank Holding Company Policy Statement (Policy Statement) for small bank holding companies as well as certain savings and loan holding companies. The Policy Statement facilitates the transfer of ownership of small community banks by allowing their holding companies to operate with higher levels of debt than would otherwise be permitted. Institutions subject to the Policy Statement are not subject to the Board’s regulatory capital requirements. Currently, bank holding companies with less than $500 million in total consolidated assets may be subject to the Policy Statement. The proposed rule will permit to certain bank holding companies and savings and loan holding companies with less than $1 billion in total consolidated assets that meet the qualitative requirements to qualify. The Fed also adopted an interim final rule to exclude from the Fed’s regulatory capital requirements savings and loan holding companies with less than $500 million in total consolidated assets that meet the qualitative requirements in the Policy Statement.  Release.  Policy Statement.  Interim Final Rule.