New Federal Rule Bans Reputation Risk as Basis for Debanking

This joint OCC/FDIC rule prohibits regulators from using reputation risk to force account closures. By requiring supervision to focus on material financial threats, the rule seeks to end the debanking of legal but politically sensitive industries — a major advocacy win for ACA and the ARM industry.

The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) have issued a landmark joint final rule that fundamentally changes bank supervision by codifying the elimination of reputation risk.

This rule is a significant victory for industries that have historically faced “debanking” — the termination of banking services based on the nature of their business rather than financial risk — and reflects years of advocacy by groups including ACA International.

The final rule, Prohibition on Use of Reputation Risk by Regulators, aims to increase the objectivity of bank examinations by removing a category that regulators admit was too subjective and prone to abuse.

Key Provisions:

• Removal from Supervision: The rule codifies the removal of reputation risk from the agencies’ supervisory frameworks. It prohibits regulators from criticizing (formally or informally) or taking adverse action against an institution solely based on reputation risk.
• Protection Against Political/Social Bias: Regulators are now explicitly forbidden from requiring or encouraging a bank to close an account or terminate a service based on a customer’s political, social, cultural, or religious views, or their constitutionally protected speech.
• Focus on Material Risk: The agencies clarified that reputation risk is often distracted from core financial risks (credit, market, liquidity). Under the new rule, any supervisory action must be tied to tangible threats to an institution’s financial or operational condition.
• Definition of Reputation Risk: The rule defines it as the risk that an institution’s activity could negatively impact public perception for reasons not clearly and directly related to its financial or operational health.

The final rule takes effect on June 9.

ACA International’s Advocacy and Support

ACA, representing the debt collection industry, has been a leading voice in the push for this reform. For debt collectors, “reputation risk” was often used by banks as a pretext to deny or terminate essential banking services, despite the industry being legal and highly regulated.

ACA has long argued that the debt collection industry was unfairly targeted during Operation Choke Point and subsequent eras of debanking. ACA has advocated for banking decisions to be based on individualized risk-based analysis rather than categorical labels like high risk.

ACA supported the 2025 Executive Order Guaranteeing Fair Banking for All Americans, which directed agencies to ensure that reputation risk wasn’t used as a pretext for politicized debanking.

ACA has also worked closely with lawmakers on the Fair Access to Banking Act, pushing for a regulatory environment where legal businesses — including those in debt collection, firearms, energy, and crypto — are treated fairly based on empirical data.

In comments to the FDIC and OCC (PDF), ACA International CEO Scott Purcell emphasized that codifying these protections is critical to preventing ideological bias from disrupting the American banking system, ensuring that bank regulators cannot inject personal or political misperceptions into the supervisory process.

Related Content from ACA International:

ACA Backs Federal Push to End ‘Reputation Risk’ and Protect Banking Access

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