Fed agencies pledge more scrutiny of core provider business practices

The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation issued a statement to clarify their risk-based supervision of specific services offered by core providers to community banks.

The statement clarifies the agencies’ risk-based supervision of certain services that core providers offer to community banking organizations. The statement addresses:

• Select aspects of how community banking organizations engage with core providers.
• The extent to which the agencies will take these aspects into consideration when determining the level of supervisory oversight of core provider services.
• The agencies’ supervisory and enforcement authorities where a core provider engages or causes a community banking organization to engage in unsafe or unsound practices or violations of laws or regulations.