On July 15, 2025, the Federal Deposit Insurance Corporation (FDIC) proposed revising its guidelines for appealing material supervisory determinations. The Proposed Rule reflects an effort to enhance the independence, clarity, and fairness of the FDIC’s internal appeals process in response to years of criticism from regulated institutions and trade groups. If adopted, the revised guidelines would strengthen procedural protections, increase transparency, and replace the FDIC’s existing Supervision Appeals Review Committee (SARC) with a standalone office within the FDIC known as the Office of Supervisory Appeals (OSA). This proposal merits a fresh comparison to the appeals processes of the other prudential agencies: the Office of the Comptroller of the Currency (OCC) and the Board of Governors of the Federal Reserve System.
FDIC’s Current Appeals Framework
Under the FDIC’s current appeals guidelines, an FDIC‐supervised institution may seek review of any “material supervisory determination.” That term broadly covers virtually all major exam ratings and related findings, including CAMELS, IT, trust, Community Reinvestment Act (CRA), and consumer‐compliance ratings; required loan‐loss provisions; significant asset classifications; certain determination relating to violations of law; Regulation Z restitution; decisions relating to informal enforcement actions; compliance with formal enforcement actions; matters requiring board attention; and certain other supervisory determinations as may be deemed appropriate. However, formal enforcement decisions (such as cease-and-desist orders, civil money penalties, placing an institution into conservatorship, or invoking prompt corrective action) are expressly excluded and are not appealable.
Before submitting a formal appeal request, institutions are encouraged, but not required, to make a good-faith effort to resolve disputes with on-site examiners or the appropriate regional office. If issues remain unresolved, the institution may submit a written request for formal review to the appropriate FDIC division director within 60 calendar days after receiving the exam report or other written notice of the disputed determination. The division director then has 45 days to review the request and must either issue a written ruling on the points raised or refer the matter to the SARC for appellate consideration.
If the institution is dissatisfied with the division director’s decision, it may appeal to the SARC within 30 calendar days of receiving that decision. The SARC is a three‐member intra‐agency panel composed of FDIC board‐affiliated senior officials, with the FDIC general counsel and FDIC ombudsman serving as nonvoting members. The appeal must be filed in writing and include a copy of the division director’s decision and the institution’s full legal and factual arguments. The institution may also request an oral presentation before the SARC. Once an appeal is filed, the SARC independently reviews the record as of the date of the original determination – focusing on consistency with applicable laws, regulations, FDIC policy, and the overall reasonableness of the supervisory action. A hearing on the appeal must be convened within 90 days of filing, and the SARC must issue a written decision within 45 days after such hearing. The SARC’s decision is communicated to the institution in writing and is published in redacted form for precedent.
The Proposed Rule
Chief among the Proposed Rule’s changes is replacing the current SARC structure with a new OSA as the final review body. Under the Proposed Rule, an institution would first appeal a material supervisory determination to the appropriate division director in the same manner as is currently in place. If the matter remains unresolved, the OSA would hear the matter. This independent office is intended to provide a “robust, independent supervisory appeals process” that promotes impartiality and consistency. The ultimate goal of the OSA is to remove appeals decisions from the usual examination management chain and vest them in a standalone entity staffed by objective experts.
The proposed OSA would be a permanent, standalone unit of the FDIC, separate from the examination divisions. The OSA would report directly to the FDIC chairperson’s office and be granted delegated authority by the FDIC board of directors to decide appeals. Decision panels would consist of three reviewing officials, each serving a fixed term. Notably, at least one panelist must have hands-on bank supervisory experience, and, to ensure neutrality, the FDIC plans to recruit from outside its own ranks. The Proposed Rule notes that potential candidates may include former regulators, former bankers, and other industry professionals with relevant expertise. Current FDIC employees would be ineligible for these panelist roles, and appointees would serve as part-time, conflict-checked FDIC staff members bound by FDIC confidentiality rules. The FDIC expects the OSA will be fully staffed and operational as soon as the Final Rule is issued and will replace the SARC as the final appeals forum.
Procedurally, the Proposed Rule otherwise mirrors the existing appeals framework. While an appeal would still originate with the division director, any further appeal would go to an OSA panel. The OSA will then conduct a new review of the contested determination. Like the division director, the OSA must assess the matter solely on legal and policy consistency and “the reasonableness of the support” offered for each side’s position. Importantly, the Proposed Rule explicitly instructs the OSA not to defer to the original examiner’s or the institution’s preferred outcome. By spelling out a nondeference standard, the Proposed Rule underscores that appeals are to be decided independently on their merits.
The FDIC’s ombudsman will continue to have a neutral oversight role under the new rules. As before, the FDIC ombudsman will serve as a nonvoting participant who liaises between the FDIC and appellant institutions; however, under the Proposed Rule, the FDIC ombudsman may submit written views to the appeals panel for its consideration and is tasked with monitoring for examiner retaliation.
FDIC leadership emphasizes that the reforms are intended to make the appeals process more independent, apolitical, and consistent. By staffing the OSA with external, term limited officials, the FDIC expects to attract impartial reviewers who have no ongoing career incentives tied to specific supervisory divisions. This “standalone entity” approach allows reviewers to devote their full attention to appeals cases, rather than juggling multiple FDIC duties. The inclusion of former bankers and regulators on appeal panels is meant to ensure that each panel has deep practical knowledge of banking, improving the quality and consistency of decisions. Collectively, these changes aim to reduce any perception of bias (for example, examiners reviewing one another) and to foster uniformity in how policies are applied across regions.
If finalized, these revisions would provide institutions with a clearer and more robust path to challenge exam-based supervisory findings that may affect ratings, regulatory treatment, and reputational standing. Public comments are due 60 days after publication in the Federal Register, with a Final Rule anticipated in early 2026. The promulgation of the Proposed Rule also invites comparisons with similar frameworks maintained by the OCC and the Federal Reserve, both of which have implemented mechanisms aimed at providing independent, impartial review of supervisory determinations.
Appeals at the OCC
The OCC has long maintained an informal appeals process, through the OCC’s supervisory officers, and a formal appeals process through its Office of Enterprise Governance and the Ombudsman or the deputy comptroller. Similar to the Proposed Rule, the OCC ombudsman is housed within the OCC but operates separately from the agency’s supervisory chain of command.
Institutions supervised by the OCC may appeal examination ratings, determination on the adequacy of allowance for credit losses, individual loan ratings, violations of law, Shared National Credit decisions, fair-lending decisions, licensing decisions, and material supervisory determinations in matters requiring attention, compliance with enforcement actions, or other conclusions in a report of examination. Generally, once an institution determines to appeal a decision, the institution may submit an informal appeal to the appropriate OCC supervisory office. Any informal appeal must be submitted within 10 days of receiving a final written agency decision. Once filed, the supervisory office then has 10 days to issue a written appeals decision. If the institution does not agree with the supervisory office’s determination, the institution may seek further resolution through the OCC’s formal appeals process.
Under the formal appeals process, an institution may submit an appeal to either the deputy comptroller or the OCC’s ombudsman. In both cases, the appeal must be submitted within 60 days of receiving the final written agency decision giving rise to the appeal.
If an appeal is filed with the deputy comptroller, the deputy comptroller will review whether the subject decision is appealable and solicit an appeal response from the applicable supervisory office. The deputy comptroller may then engage in discussions with the institution, request supplemental information, and consult with independent OCC staff. Once the review is completed, a final written decision is typically issued by the deputy comptroller within 45 days. If an institution disagrees with the deputy comptroller’s decision, the institution may further appeal the matter to the OCC ombudsman. This second-tier appeal must be submitted to the OCC ombudsman within 15 days of receiving the deputy comptroller’s decision letter. Upon receipt, the OCC ombudsman will review any material considered in the appeal response, including information submitted by the institution at the time of the appeal or any other information considered in making the appeal decision and may seek additional information from the appellant institution. As with the initial appellate decision, the OCC’s ombudsman will generally issue a response to the second-tier appeal within 45 days of acceptance.
If the appeal is filed directly with the OCC ombudsman, rather than seeking an initial determination from the deputy comptroller, the OCC ombudsman will determine whether the subject decision is appealable within seven days of receipt. If the decision is appealable, the supervisory office will submit an appeal response to the OCC ombudsman within seven days of the OCC ombudsman’s acceptance of the appeal. The OCC ombudsman may then engage in discussions with the institution, request supplemental information, and consult with independent OCC staff. In certain cases, the OCC ombudsman may order an independent reexamination, conducted by examiners who were not involved in the original review. Once the review is completed, a final written decision is typically issued within 45 days. Notably, if an appeal is filed directly with the OCC ombudsman, the institution is not eligible for a second-tier review.
As with the Proposed Rule, the OCC’s appeals policy requires the publication of anonymized appeals proceedings and prohibits retaliation against institutions that file appeals.
Federal Reserve Appeals
Under the Federal Reserve’s appeals framework, institutions are generally encouraged to raise concerns directly with Reserve Bank or Federal Reserve Board staff and resolve disagreements before beginning a formal appeal. Unlike the OCC’s informal framework, the Federal Reserve’s informal resolutions process does not have set timelines or procedural requirements; rather, institutions and regulators are expected to act in good faith. Despite the lack of procedural requirements, during this informal resolution process, institutions may contact the Federal Reserve’s ombudsman for confidential assistance and guidance.
If informal efforts do not resolve the relevant issues, the institution may submit a formal written appeal to the Fed’s ombudsman within 30 calendar days of receiving the supervisory determination. Under the Federal Reserve’s appellate process, institutions may appeal any “material supervisory determination” including material determinations relating to examination or inspection composite ratings, material examination or inspection component ratings, the adequacy of loan loss reserves and/or capital, significant loan classification, accounting interpretation, matters requiring attention or immediate attention, CRA ratings (including component ratings), and consumer-compliance ratings. Upon receipt, an initial review panel is appointed by the appropriate Federal Reserve division director. This initial panel consists of three Reserve Bank employees not involved in the original determination and an attorney adviser. The initial panel reviews the record independently, without deference to prior findings, and may meet informally with the institution. Following a review of the record, the initial panel issues a written decision within 45 days.
If the institution disagrees with the initial panel’s decision, it may request a final review by submitting written notice to the Fed’s ombudsman within 14 days. A final review panel composed of at least three Federal Reserve Board employees, including at least one who is a Federal Reserve associate director or higher, and an attorney adviser will then assess the appeal. This final panel reviews only the record from the initial appeal and applies a “clear error” standard of review. No new evidence may be submitted, but the final panel may determine in its discretion to have an informal appeal meeting at which a representative of the institution or counsel may appear personally to make an oral presentation to the final panel. Following a complete review, the final panel issues its written decision within 21 days of the request.
Unlike the OCC process (but similar to the Proposed Rule’s), the Fed’s ombudsman plays a procedural support role as opposed to a decision-making role. The Fed’s ombudsman advises institutions on how to navigate the process and serves as a confidential point of contact for retaliation concerns. While the ombudsman does not decide appeals, their involvement is intended to provide a valuable safeguard for preserving institutional independence and trust in the process.
Strategic Considerations and Industry Outlook
Supervisory appeals processes across all three federal banking agencies are critically important because they typically represent an institution’s sole administrative remedy. Judicial review of supervisory ratings is generally unavailable unless a finding is incorporated into a formal enforcement action or final agency order. Absent that, courts routinely hold that ratings decisions, and determinations on CAMELS, CRA, and IT assessments, are nonfinal agency actions and therefore ineligible for review under the Administrative Procedure Act.
As a result, institutions facing adverse examination findings must treat the appeals process as their only opportunity to create a formal record, present factual and legal rebuttals, and seek modification or reversal of supervisory conclusions. Additionally, exam findings and related requirements are not stayed as a matter of course when the determinations are appealed. If an institution desires the effects of a determination to be stayed, the institution must formally request action be taken.
The Proposed Rule and an anticipated shift in supervisory focus may encourage greater industry pushback on agency discretion, and banks may be more inclined to challenge material supervisory determinations that impact their growth, capital planning, or reputational profile. These appeals may also be strategically used to preserve a favorable standing ahead of potential mergers or capital offerings.
Nevertheless, appealing a supervisory determination carries certain risks. Institutions must carefully consider the potential impact on their ongoing supervisory relationship, the strength of their factual record, and the likelihood of success based on prevailing agency precedent. For that reason, early preparation is essential – banks should engage legal counsel at the examination stage, ensure contemporaneous documentation of examiner interactions, and begin preparing a factual narrative that supports potential appeal arguments.
If adopted as proposed, the Proposed Rule represents a meaningful shift in the FDIC’s appeals process. If finalized, the revisions would provide institutions with greater transparency and independence. While internal agency appeal remains a nonpublic and nonlitigious process, its significance cannot be overstated, particularly given the limited availability of judicial review.
While the Proposed Rule is not expected to be finalized until 2026, in the interim, regulated institutions should evaluate internal policies for addressing examination disputes, consider designating escalation teams within legal or compliance functions, and familiarize themselves with the appeals frameworks across all three federal banking regulators.
If you have any questions, or would like additional information, please contact one of the attorneys on our Financial Services team.
You can subscribe to future advisories and other Alston & Bird publications by completing our publications subscription form.