CFPB opens debanking probe into large U.S. banks after OCC report

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CFPB debanking probe US banks

Highlights

CFPB launched an investigation into nine major banks, including JPMorgan, Bank of America, and Citibank, after the OCC reported potential consumer harm from debanking practices.
The CFPB will review compliance with the Equal Credit Opportunity Act, Fair Credit Reporting Act, and UDAAP rules, emphasizing adverse action notice requirements for denied financial services.
Sectors affected by banks' debanking policies cited in the OCC report include firearms, oil and gas, and tobacco, raising compliance and risk control challenges in politically sensitive industries.

Regulatory response to OCC findings

As reported by Consumer Financial Protection Bureau, citing the Consumer Financial Protection Bureau, the agency is moving to examine whether major banks caused consumer harm or violated federal consumer financial laws in connection with practices highlighted in a recent OCC report. The bureau says the action supports Executive Order 14331, “Guaranteeing Fair Access to Banking for All Americans,” and extends its current priority of addressing unlawful debanking.

The OCC report, titled “Guaranteeing Fair Banking for All Americans,” says nine large national banks under its supervision maintained policies or practices that denied or restricted financial access based on political or religious beliefs or otherwise lawful business activity. The banks named are JPMorgan Chase Bank, Bank of America, Citibank, Wells Fargo Bank, U.S. Bank, Capital One, PNC Bank, TD Bank and BMO Bank.

CFPB Acting Director Mark Paoletta says the bureau will fully investigate whether institutions cited in the OCC report, as well as others, complied with federal consumer financial laws and will take action where appropriate. The CFPB notes it holds primary supervisory and enforcement authority for banks with more than $10 billion in assets, including the institutions identified in the OCC review.

Compliance focus and industry implications

The bureau says it evaluates financial institutions for compliance with the Equal Credit Opportunity Act, the Fair Credit Reporting Act and rules covering unfair, deceptive or abusive acts or practices. It adds that adverse action notice requirements remain a particular area of focus when reviewing whether consumers were improperly denied services.

As part of that effort, the CFPB says it previously reviewed its examination manual, guidance, regulations and other supervisory materials to remove reputation risk concepts that could contribute to unlawful debanking. The agency also says it is analyzing consumer complaints, supervisory information and enforcement data for additional evidence and is already pursuing its own investigations based on that material.

The bureau recently updated its website and complaint portal with information intended to raise awareness about debanking and is continuing to encourage consumers who believe they were debanked to file complaints. The OCC report cited by the CFPB says affected sectors most notably include firearms, oil and gas, and tobacco, pointing to potential consequences for banks' compliance, risk controls and customer access practices across politically sensitive industries.

In our earlier article on the OCC’s review of debanking practices at major U.S. banks, we covered the regulator’s finding that some large lenders restricted access to services using subjective, nonfinancial criteria, including political or religious affiliation. We also noted that the OCC did not announce fines but signaled possible policy changes and continued coordination with other regulators, as the issue drew heightened political attention and debate over how banks apply risk and compliance standards.

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