We can think of no better day than Martin Luther King, Jr. Day to reflect on equality. And while many people this week ponder equality in terms of race, religion or even sexual orientation, we think it also applies to the banking world—specifically to equality in overdraft management.
Earlier this year, the Consumer Financial Protection Bureau (CFPB) announced it would push back its rulemaking process tied to overdrafts from July to October. But October has come and gone, and so the wait continues…
In fact, it is widely believed that even if the CFPB had made decisions in October, an effective date on rule-making would be no earlier than mid-2017. So not only does the waiting continue… it could go on for more than a year!
BSG Financial Group recently participated in an informative webinar sponsored by the American Bankers Association, called “Avoiding ‘OOPS!’ in Your Overdraft Protection Program.” As the title implies, the focus was on compliance and mitigating risk as it relates to managing a discretionary overdraft program. The program provided tips on how to successfully offer consumers a cost-effective service without encouraging reckless behavior by actively managing the legal, compliance, operations and reputation risk that accompanies overdraft protection (ODP) programs today.
The webinar offered many sound suggestions with regard to ad hoc decision-making, lines of credit, etc., but we found the section that related to third-party arrangements especially valuable. According to the presenter, Patti J. Blenden, CRCM, CPA, President, Financial Solutions for Growing Companies, Inc., overdraft programs managed by third-party providers have the potential to raise concerns that differ from in-house ODP solutions.