Fed moves forward on proposed three-level guidelines for accessing account, payment services

Comments on a new framework for a “transparent and consistent” set of factors for considering requests to Federal Reserve accounts and payment services from banks and non-banks alike are being sought by the agency, it said Tuesday.

Under the proposal, federally insured banks would receive a streamlined review for consideration – firms neither federally insured nor supervised would receive the strictest review, the Fed indicated.

The Fed said the comments, due in 45 days, will be for a supplement to its May 2021 proposal about factors used when considering account and payment service requests. “Institutions offering novel types of financial products or with novel charters have emerged in recent years and many have requested access to accounts and payment services offered by Federal Reserve Banks,” the Fed said in a release. “It is important that Reserve Banks evaluate all access requests with a transparent and consistent set of factors.”

Last year, the Fed unveiled “Account Access Guidelines,” which outlined six principles for the Reserve Banks to consider when weighing a request. Generally, the principles require the requesting entity to be eligible to receive Fed services, and cannot present “undue risk” to the Fed system or the financial system at large.

On Tuesday, the Fed said its latest action is designed to provide additional clarity on its approach. It said the latest action “invites comment on a new framework that builds upon the May 2021 proposal and would be used by Reserve Banks to evaluate all requests for accounts and services.”

By way of example, the agency said federally insured banks would enjoy a more streamlined level of review. However, those without insurance and that are supervised by a federal banking agency would undergo an intermediate level of review.

Those without insurance and not supervised by a federal bank regulatory agency would be subject to a stricter level review, the agency said.

“With technology driving rapid change in the payments landscape, the proposed guidelines would ensure novel requests for access to Federal Reserve accounts and payment services are evaluated consistently and transparently to ensure a safe and innovative payment system,” said Gov. Lael Brainard. Brainard leads the Fed Board committee on payments.

Federal Reserve Board invites public comment on supplement to its May 2021 proposal