In Canada, a government agency recently published the results of its review of retail sales practices at the nation’s six largest banks. It found that the industry’s sharp focus on sales can increase the risk that consumers will pay for unsuitable financial products or services.
A similar reckoning is under way in Australia, where a government commission that was established in the wake of various scandals has been holding public hearings on consumer banking practices.
But here in the U.S., the regulatory review of banking sales abuses has happened behind closed doors.
The Office of the Comptroller quietly wrapped up its review of sales practices at 40 large and midsized banks, typically firms with more than $10 billion of assets, earlier this year. And as American Banker reported Tuesday, the agency has no plans to release a report on its findings. Nor has the OCC explained why it plans to keep its conclusions confidential.
That is a worrisome stance, as it prevents the public from assessing the extent of the problems that the review uncovered and the adequacy of the steps being taken to prevent their recurrence. It will only fuel the perception that the OCC, helmed by a former bank CEO, is too cozy with the big banks it regulates.
To be clear, this is not about confidential supervisory information regarding particular banks. No one has called for that sort of sensitive information to be made public.
Rather, it concerns industry-wide findings that speak to the question of whether Wells Fargo, which has become a poster child for sales abuses, was a substantial outlier from the rest of the U.S. retail banking industry.
The information that the OCC is withholding from public view is not so sensitive that the agency refuses to share it with industry insiders.
Dan Ryan, who heads the banking practice at PwC, told American Banker on Tuesday that his firm, which often does work for big banks, was briefed on the OCC’s overall findings.
The OCC said during the briefing that it issued 252 Matters Requiring Attention notices to individual banks, plus five more for the entire industry, according to Ryan. So-called MRAs describe banking practices that examiners deem to be deficient and prescribe remedial actions.
Without more detail, it is impossible to assess the severity of the problems that the OCC uncovered. Were they mostly procedural, or did they result in substantial harm to consumers?
When American Banker asked OCC spokesman Bryan Hubbard on Tuesday about the information provided by PwC, he declined to comment.
Hubbard did acknowledge for the first time that banks other than Wells Fargo opened accounts without proof of customers’ consent, but his comments did not shed light on the scale of that particular problem. Nor did they reveal the extent of other types of sales abuses.
The OCC’s review of sales practices was initiated in 2016 under then-Comptroller Thomas Curry, who left the agency 13 months ago.
Curry was succeeded by acting Comptroller Keith Noreika, a lawyer who has represented big banks. Then in November, Joseph Otting was sworn in as comptroller.
Otting is a former CEO and chairman of OneWest Bank, which is wholly owned by CIT Group, a $51 billion-asset company. The OCC has said that he will be recused from certain matters involving CIT, but his own comments have fanned criticism that he is too close to the industry.
It is unclear whether the OCC would have handled the sales review differently if Curry had remained at the helm, though one former agency employee speculated that, under that scenario, “I think we probably would be having a different conversation.”
It is not too late for Otting to reverse course. The public has a right to know what the OCC found.
Bankshot is American Banker’s column for real-time analysis of today's news.