The Federal Financial Management Agency says it’s not in compliance with a proposed regulation designed to make financial institutions more accountable for their customers.
The FMA’s interim rule, which is still in its review process, would require institutions to report their performance on a quarterly basis, and make them accountable for the costs of compliance.
Financial institutions are expected to submit a final rule by the end of the year.
The agency says the proposed rule is “fundamentally flawed.”
It adds that the proposal is “not based on sound policy, regulatory standards or statutory law.”
It says it was also not given adequate notice of the proposed regulation’s contents.
Federal regulator clarifies regulator’s position on ‘non-compliance’ rule Financial institutions have been asked to provide the regulator with an explanation of why they don’t comply with the proposed rules.
But the regulator has repeatedly told the financial services industry that it is not in violation of its rules.
Financial services are a big driver of the economy and a key driver of growth.
Financial institutions make up about 15 per cent of the US economy.
The proposed rule, called the Financial Responsibility and Accountability Act of 2016, would make it mandatory for banks to report annual financial performance on their quarterly filings.
It would also require them to report the number of accounts that have been closed, how much they charge, and the total amount of money they owe.
It’s a key provision for the financial sector that critics say could have a chilling effect on banks and stifle innovation in financial services.
Earlier this month, the FMA announced a proposal to regulate the banking industry to improve oversight and transparency, but it was delayed by the White House and the Federal Reserve, and a federal appeals court blocked it.
As well, the agency said it has not received a formal comment from the White Houses Office of Management and Budget on its proposal, which it says is required under a 2011 law passed by Congress.
“The FMA has been and will continue to be a strong advocate for the need to protect the financial system and ensure that the public benefit is maximized for all consumers and investors,” the FFA said in a statement Friday.
But some regulators have raised concerns about the proposed regulatory change.
In a recent ruling, the Supreme Court of the United States said it would review whether the proposed financial oversight and accountability rule violates the First Amendment.
Critics of the rule say the proposed requirement is a major step backwards.
While the FSA is in the process of reviewing its proposed rule to determine whether it is in compliance, the regulator said it will be releasing a proposal “to implement the rule in a timely and effective manner.”
“We are committed to following the rules and making sure that the financial markets are sound and safe,” the regulator added.
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