Federal bank regulatory agencies have served notice that deposit advance products, sometimes known as bank “payday loans,” will soon be subject to significant new restrictions and heightened supervisory scrutiny. In coordinated actions, the Federal Deposit Insurance Corporation (“FDIC”) and the Office of the Comptroller of the Currency (“OCC”) announced proposed Supervisory Guidance that will mandate significant changes to the practices of State-chartered non-member banks and national banks offering such products. The Supervisory Guidance is open for comment for 30 days.

This Client Alert considers the proposed OCC/FDIC Supervisory Guidance in detail, and also addresses the narrower response to the CFPB study issued by the Board of Governors of the Federal Reserve System (the “Board”) that applies to State-chartered member banks.