Banking and Finance Law Daily Wrap Up, PRUDENTIAL REGULATION—FDIC issues guidelines for appeals of material supervisory determinations, (Jan 22, 2026)

By George M. Gullo, J.D.

Under the revisions, the Office of Supervisory Appeals will serve as the final level of review for material supervisory determinations.

As announced in a Jan. 22, 2026, memorandum from General Counsel Matthew P. Reed to the Board of Directors of the Federal Deposit Insurance Corporation, the FDIC has finalized revisions to its Guidelines for Appeals of Material Supervisory Determinations, re-establishing the Office of Supervisory Appeals (OSA) as the agency’s independent, standalone body for resolving supervisory disputes. The move effectively restores the framework first introduced in 2021—and later abandoned in 2022—by once again replacing the Supervision Appeals Review Committee with an entity structurally separated from the FDIC divisions that make supervisory determinations (see Banking and Finance Law Daily, July 16, 2025). The Guidelines will take effect once the FDIC Chair determines that the new OSA is fully operational.

Final review. Under the revisions, the OSA will serve as the final level of review for material supervisory determinations and will be staffed by part-time reviewing officials selected for their supervisory, examination, or industry experience. Each three-member panel must include at least one reviewer with supervisory or examination experience and at least one with industry experience, reflecting commenters’ calls for broader perspectives in appeal decisions. The FDIC will publish background information about reviewing officials, and in cases where vacancies or temporary unavailability make a full panel impossible, the FDIC Chair may authorize the OSA to operate with fewer members or rely on temporary appointees for up to 120 days.

Appealable matters. The final Guidelines also broaden the scope of appealable matters. Institutions may continue to challenge ratings, loan classifications, loss-reserve determinations, and violations assessments, but may now also appeal determinations relating to compliance with informal enforcement actions, such as memoranda of understanding, as well as compliance with conditions imposed through supervisory or application processes. The Guidelines reaffirm that formal enforcement actions themselves are not appealable, and they exclude the underlying facts of proposed or pending enforcement actions when the FDIC has notified an institution that the action is based on unsafe or unsound practices, sanctions-related violations, or a refusal to sign a tolling agreement. The FDIC retained these exclusions to preserve the agency’s ability to respond quickly to matters involving heightened supervisory risk.

Appeals process. The appeals process continues to follow a two-step structure. Institutions must first seek review from the appropriate Division Director, who has 45 days to issue a written determination or refer the matter directly to the OSA. If dissatisfied, the institution may appeal to the OSA within 30 days. The OSA must convene a panel within 90 days and issue a written decision within 45 days of its meeting. The OSA will conduct an independent review without deference to either party, focusing on consistency with FDIC policies and the reasonableness of the positions advanced. The burden of proof remains with the appealing institution, and the record is generally limited to facts existing at the time of the underlying determination.

Increase transparency. The FDIC now requires timely sharing of all documents submitted to the OSA by either supervisory staff or the institution, including any written communications about the substance of an appeal. Any redactions must be explained, and proposed redactions to the OSA’s final decision will be shared with the institution before publication to avoid inadvertent identification. Consistent with prior practice, the FDIC will publish redacted appellate decisions and will explore additional steps to increase transparency around outcomes and appeal trends.

Ombudsman. The Guidelines also detail the roles of the Legal Division and the Ombudsman. The Legal Division will review draft decisions for consistency with law and FDIC policy and will resolve procedural questions, such as whether an issue is eligible for appeal, in consultation with the OSA. The Ombudsman will continue to monitor the process for potential examiner retaliation and confirm that both parties receive all materials related to an appeal. These measures were included to address concerns raised by commenters about fairness and independence in the supervisory process.

Enforcement actions. The revisions further clarify how supervisory appeals interact with enforcement actions. When permissible, the facts underlying certain proposed enforcement actions may be reviewed as part of an appeal and will be considered on an expedited basis, with the FDIC generally delaying initiation of enforcement until the appeal concludes. Institutions must sign tolling agreements when requested or risk losing the ability to challenge those underlying facts. Appeal rights also revive automatically if the FDIC does not advance an enforcement action within specified timeframes. These provisions are intended to strengthen due-process protections while maintaining the agency’s ability to move quickly in cases involving significant supervisory concerns.

Clearer rules. The FDIC will announce when the OSA becomes operational. Once effective, the revised Guidelines will offer institutions a more independent, transparent, and structured avenue for challenging supervisory determinations—restoring much of the model the agency first adopted five years ago and responding to industry feedback calling for clearer rules and greater consistency in the appeals process.

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