Back in 1968 and again in 1970, bankers thought the world was coming to an end. We were handed Regulation Z that required many additional disclosures and interest rate restrictions. It was considered by many to be the end of “earning” a decent return on loans.
Well, fast forward to 2023, the new rules on “junk” fees is going to have a significant larger impact. In the attached article you will see the CFPB is saying that ALL banks they examined for junk fees have decided to no longer charge an NSF fee. What, wait?! Why are they going to that extreme?
In this writers opinion, bankers are running scared of negative publicity. How do you address that? Simple. Fix the problem before your next exam.
Read this article closely. Compliance Officers everywhere should be jumping on this and protecting their banking organization “ahead” of the next exam.
I read the significant issue is that these banks, Regions and Wells Fargo, specifically named, were charging fees that were not disclosed.
Role number one of any compliance officer is to know what your disclosures say. So read them again, make sure they agree with what your staff are telling new and existing customers. THEN make sure the system is doing what your disclosures outline is to happen.
We all know that for NSF fees, often the check is represented before the account owner got the NSF notice in the mail. Another fee is charged but the account owner did not have the notice thus regulators consider they did not have enough time to cure the situation. So, why not set up the NSF to charge if they remain NSF after 3 or 4 days? Why should you not charge it at all?
I think this new push on junk fees and consumer protection provides all bankers a catalyst to push for electronic notices. Think about it, if your organization does electronic NSF notices at the end of nightly processing and again in the morning when the determination to pay or return is made, and then impose the charge on day 2, if the account remains NSF, the consumer cannot say or claim they had no time or notice regarding the account being NSF.
Let’s all try to think out of the box, but do it quickly. Your institution needs you to protect them BEFORE the next exam. Have a plan in place. –
Need help? Want to brainstorm about your idea or solution? Give me a call or text me at 314-803-6593.