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Your Account Holders Are Not Waiting for a CFPB Decision on Overdrafts. Why Are You?

Posted by Jeff Harper, President, BSG Financial Group on Sep 6, 2016 5:46:58 PM

The current state of the overdraft industry can be summed up in one word, “WAITING.” 

BSG Financial Group hears from some institutions that they are delaying offering an overdraft privilege program until the Consumer Financial Protection Bureau (CFPB) decides how financial institutions must manage consumer and business overdrafts.

This waiting reminds us of a quotation from the novelist Morris West who wrote, “If you spend your whole life waiting for the storm, you'll never enjoy the sunshine.” 

We—banks, credit unions and service providers—have all been waiting for more than two years for the regulatory agency to finally announce its conclusions. Now it looks like mid-2018 before any material changes might occur. And even then, the changes recommended by Pew Charitable Trust (hired by the CFPB to handle the research aspects of their regulatory review) seem rather minor: revised disclosures, reasonable fees, and standard posting order.

In the meantime… while we wait, your account holders seek short-term liquidity elsewhere and your bottom line pays the price.

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Topics: Overdraft, CFPB, overdraft privilege

Overdraft Privilege Myths Debunked

Posted by Jeff Harper, President, BSG Financial Group on Aug 16, 2016 11:59:28 AM

Most financial institutions acknowledge that overdraft fees represent a remarkable source of non-interest income. What may not be clear to some is the fact that overdraft privilege programs are more than just a source of revenue. Recent data suggests that the service offers as much of a benefit to the consumers who use it as it does to the institutions that provide it. 

Consumer Financial Protection Bureau (CFPB) director Richard Cordray has said on many occasions that his agency is not looking to do away with overdraft services (but is instead leaning toward minor changes in how institutions manage the programs). As such, it doesn't appear overdraft programs are going away. 

So how should community institutions view overdraft privilege in the current environment?

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Topics: Courtesy Overdraft, Compliance, Overdraft Protection, CFPB, overdraft privilege

BSG Financial Group Helps Optimize Bank's Overdraft Program Through Consultative Partnership

Posted by Michele Rehm, Marketing Manager on Mar 15, 2016 7:00:00 AM

STAR Financial Bank Success StoryIn April, 2014 BSG Financial Group helped STAR Financial Bank “re-launch” its overdraft privilege service, having previously offered a competitive vendor’s program since 2002. Patrick Burch, vice president, deposit administration officer, joined STAR Financial soon after the implementation was complete and has since been responsible for managing the service, optimizing its performance.

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Topics: Overdraft, overdraft privilege, Consultative Partnership

Is Overdraft Privilege Dead?

Posted by Jeff Harper, President, BSG Financial Group on Feb 23, 2016 5:49:35 AM

You might answer, 'Yes’ if you saw the headline, "CFPB Urges Banks to Ditch Overdraft Accounts," from an American Banker article published Feb 3, 2016.

However, if you read the entire article, you found that The Consumer Financial Protection Bureau (CFPB) director Richard Cordray was merely asking financial institutions—in a letter he sent to the nation's 25 largest retail banks—to consider providing products for consumers who cannot obtain checking services, and to "lower the bar" when it comes to screening them for those products.

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Topics: Courtesy Overdraft, Compliance, Overdraft Protection, CFPB, overdraft privilege