No More Sitting on the Fence. The CFPB Signals Minimal Changes on Overdraft Rules.

Posted by Michele Rehm, Marketing Manager on Jun 10, 2015 1:31:00 PM

bit of welcome news for financial institutions came out of the Consumer Financial Protection Bureau (CFPB) this week. According to a June 5, 2015 article, “U.S. banks are poised to score a victory in their fight to keep regulators from pinching the billions of dollars in fees they charge consumers who overdraw their accounts.”

The CFPB Signals Minimal Changes on Overdraft Rules
The article cites two unnamed people briefed on the CFPB ’s work who say the Bureau is leaning against issuing tough new rules on banks that would limit the number of charges or the frequency they can impose them on consumers. This, after the CFPB has studied overdraft fees for more than three years.

Instead, according to the sources, the Bureau is considering improving opt-in disclosure policies, as well as governing the order in which banks process transactions.

These much-more-palatable policies could be the result of the research the CFPB conducted, which resulted in a barrage of evidence from banks that consumers actually appreciate the ability to overdraw their accounts; as well as from small banks who state that overdraft revenue is crucial to their survival. 

What does this news mean for your bank?

While some banks have adopted a wait-and-see attitude before implementing or revising their overdraft policies, many banks have not and are reaping the benefits. Wells Fargo, JPMorgan Chase, and Bank of America, for instance, posted more than $1.1 billion in overdraft fees for the first quarter of 2015.

Part of the reason these banks continue their overdraft services without change could be a recent CFPB announcement that they will delay making any decision about overdrafts until October (meaning actual regulation, if any, would probably not be enacted until 2016). This declaration, coupled with the report, seems to suggest that the time is indeed right to jump off the fence and proceed with implementing a compliant overdraft program. 

The key? Choose a provider who takes a responsible approach to implementation and customer support—one that maximizes earnings now and adjusts to whatever rules the CFPB hands down in the future.

Topics: Overdraft, Courtesy Overdraft, Fee Income