OCC Bulletin 2026-12 | April 7, 2026

Prohibition on Use of Reputation Risk by Regulators: Final Rule

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Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; Department and Division Heads; All Examining Personnel; and Other Interested Parties

Summary

The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) issued a final rule to codify the elimination of reputation risk from their supervisory programs. Among other things, the final rule prohibits the agencies from criticizing or taking adverse action against an institution on the basis of reputation risk. The final rule also prohibits the agencies from requiring, instructing, or encouraging an institution to close an account, to refrain from providing an account, product, or service, or to modify or terminate any product or service on the basis of a person’s or entity’s political, social, cultural, or religious views or beliefs, constitutionally protected speech, or solely on the basis of politically disfavored but lawful business activities perceived to present reputation risk.

The final rule will be effective 60 days after publication in the Federal Register.

Note for Community Banks

The proposed rule would apply to community banks.

Highlights

• The agencies have removed reputation risk from their supervisory frameworks and are codifying this change through a regulation.
• The final rule prohibits the agencies from criticizing, formally or informally, or taking adverse action against an institution on the basis of reputation risk.

Background

• Banking regulators’ use of the concept of reputation risk as a basis for supervisory criticisms increases subjectivity in banking supervision without adding material value from a safety and soundness perspective. The agencies have not clearly explained how banks should measure the reputation risk from different activities, business partners, or clients. Different stakeholders may have different perspectives on how activities or relationships impact an institution’s reputation. In addition, focusing on reputation risk can distract institutions and the agencies from devoting resources to managing core financial risks.
• The final rule defines “reputation risk” as the risk, regardless of how the risk is labeled by the institution or by the agencies, that an action or activity, or combination of actions or activities, or lack of actions or activities, of an institution could negatively impact public perception of the institution for reasons unrelated to the financial or operational condition of the institution.
• Under the final rule, the agencies are prohibited from requiring, instructing, or encouraging an institution or its employees to refrain from contracting with or to terminate or modify a contract with a third party, including an institution-affiliated party, on the basis of reputation risk.
• Under the final rule, the agencies cannot require, instruct, or encourage an institution or its employees to refrain from doing business with or to terminate or modify a business relationship with a third party, including an institution-affiliated party, on the basis of reputation risk.
• The final rule prevents the agencies from requiring, instructing, or encouraging an institution to enter into a contract or business relationship with a third party on the basis of reputation risk.
• The final rule further prohibits the agencies from requiring, instructing, or encouraging an institution or an employee of an institution to terminate a contract with, discontinue doing business with, or modify the terms under which it will do business with a person or entity on the basis of the person’s or entity’s political, social, cultural, or religious views or beliefs, constitutionally protected speech, or solely on the basis of the third party’s involvement in politically disfavored but lawful business activities perceived to present reputation risk.
• The final rule also makes conforming amendments to OCC and FDIC regulations, including part 1 and part 30 of OCC regulations, to eliminate references to reputation risk.

Further Information

Please contact Joanne Phillips, Counsel; or Collin Berger, Attorney, Chief Counsel’s Office, at 202-649-5490.

Adam J. Cohen
Senior Deputy Comptroller and Chief Counsel

Related Link

• “Prohibition on the Use of Reputation Risk by Regulators” (PDF)

Topic(s):

• Examination Process