The American Fintech Council (AFC) has submitted a formal comment letter to the Federal Financial Institutions Examination Council (FFIEC) backing proposed revisions to the Uniform Financial Institutions Rating System, the supervisory framework commonly known as CAMELS. The submission urges regulators to centre the modernised framework on material prudential risk rather than technical or procedural shortcomings, in what the FFIEC has described as the first comprehensive revision to the system in nearly three decades.
The CAMELS framework assigns composite ratings to US-regulated financial institutions across six components: Capital adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to market risk. Those ratings carry substantial regulatory consequences, shaping institutions’ ability to pursue acquisitions, open branches and expand product lines. A downgrade in any component can trigger supervisory restrictions that outlast the specific finding by months or years.
Rebalancing the Management component
A central recommendation in the AFC’s letter concerns the weighting of the Management component. Phil Goldfeder, chief executive of the AFC, argued that the current framework can produce composite ratings that are disproportionately influenced by isolated governance findings rather than the overall financial condition of an institution. Ian Moloney, the AFC’s chief policy officer, was more direct: “Supervisory ratings carry significant regulatory consequences that extend well beyond the examination process itself, influencing everything from expansion opportunities to merger activity. Eliminating the disproportionate weight historically placed on the Management component and ensuring that all six CAMELS components are properly structured will ensure composite ratings represent a more accurate, balanced reflection of an institution’s overall risk profile.”
The AFC also called for a technology-neutral examination standard, arguing that the rapid growth of bank-fintech partnerships and technology-enabled product delivery has rendered parts of the legacy framework structurally misaligned with how supervised institutions now operate. Under the proposed principle, examiners would assess governance and risk management effectiveness rather than the specific technology model or vendor used to deliver a given service.
Regulatory read-across
The AFC’s submission lands at a moment of heightened scrutiny of the bank-fintech partnership model in the United States. The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Federal Reserve have each signalled greater attention to third-party risk management and the operational resilience of banks that rely heavily on fintech distribution partners. Several high-profile partner bank failures and consent orders in recent years have raised questions about whether existing supervisory tools adequately capture the risk profile of institutions running embedded or marketplace banking models.
A technology-neutral CAMELS framework would, in principle, reduce the risk that examiners penalise institutions for unconventional technology architectures regardless of actual financial health. But the practical effect will depend on implementation guidance and examiner training, both of which the AFC explicitly flagged as priorities. The council called for supplemental guidance, consistent training across agencies and a strengthened supervisory appeals process to ensure the revised framework is applied uniformly across similarly situated institutions.
The AFC represents more than 150 fintech companies and banks. Its comment letter is one of a number the FFIEC is expected to receive during the public consultation period. The final form of any CAMELS revision, and the timeline for implementation, will be determined by the FFIEC following its review of submissions.
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