What Your Customers and Staff are Talking About John S. Burnett, BOL Guru
Board meetings. Planning retreats. Chamber of Commerce gatherings. Peer-group seminars. Budget meetings. Management team deliberations. With all this high-level discussion, is it any wonder that management sometimes loses touch with what's going on at "street level"? Yet, no one denies that management insight into what customers and employees are "buzzing" about -- whether it's positive, negative, or just idle chatter -- is critical.
You will need to put your own methods to work to learn what's unique about the "buzz" about or in your institution. We've read through thousands of posts in BankersOnline's Bankers' Threads and the Discussion Forum on our new website, BankingQuestions.com, for this list of things that bank customers and employees across the country are concerned about.
Liability for Counterfeit Checks
Some customers just don't "get" it. They are duped by one of the hundreds of counterfeit check scams, yet they point fingers at their bankers for "aiding and abetting" the frauds when the bogus checks bounce. At least part of their complaints might be valid. Tellers could be confusing customer access to funds under Regulation CC with check "clearing," sending mixed messages to ill-informed depositors.
Executive Steps:
Make sure tellers are informing customers asking about funds availability that depositors are liable for returned checks, even if the bank has already advanced funds.
Educate your frontline staff on the difference between funds availability and check collection.
Consider preparing a concise handout that spells it all out, to ensure that customers are getting the right message, consistently.
Error Resolution and Debit Card Transactions
Bank employees may be needlessly leaving money "on the table" when dealing with customer debit card error claims, based on our review of Bankers' Threads questions. Many cardholder claims don't require handling under the strict time constraints of the regulation, but claims departments are making final credits to customers, followed weeks later by losses when merchants re-present charges within extended time limits permitted by MasterCard or Visa.
Executive Steps:
if your institution issues debit cards, find out how it is addressing customer claims like the following, which are not "errors" under Regulation E:
Quality of merchandise or service
Quantity of merchandise
Delivery dates
Ensure that this type of merchant complaint is assigned a different procedure, separate from that required under Regulation E.
Have responsible staff members trained to recognize the difference.
Customer Identification Programs
Trustees of charitable non-profits ask why their bankers demand ID information on account signers. Bank employees ask it too, along with whether it's required to verify identification every time a customer adds an account, and how to handle ID verification for customers who are children. It's been three years since banks were required to adopt CIPs, and some banks haven't pulled them off the shelf since then to review them.
Executive Steps:
Form a working group to review your institution's CIP.
Make sure the group has good representation from the frontline staff who have to work with your rules.
Encourage the group to question each requirement that is drawn tighter than regulations require.
Make changes where needed to keep your program working for, not against the institution.
Identity Theft
Laptops have been stolen. Phishing scams have proliferated. With each theft or scam comes the potential for identity theft, followed by weeks and months of aggravating correspondence, clean-up work, and fraud alerts for your customers. For the bank, it's special handling for applications involving ID theft victims, even if the institution is lucky enough not to have been abused by anyone posing as the victim.
Executive Steps:
Get information on ID theft and related frauds into your customers' hands. Statement stuffers, website information and links, and articles in customer newsletters are all good vehicles for sharing this information.
Make sure your employees know their responsibilities if they learn of a fraud alert on a customer's credit report.
Restrict the customer and institution data that officers and employees can take off-premises on a laptop, PDA or portable data storage device like a flash memory stick.
When data must be taken outside the institution's control, make sure that the information is encrypted.
Be sure that your IT staff recognizes data compromise events that require customer and/or regulator notices.
BSA/AML Penalties
Foster Bank's troubles with BSA/AML program inadequacies began much earlier, but came to a head with the resignation of its president and a director during or immediately after a Bank Secrecy Act exam in August 2002. In 2003 came the imposition of a Cease and Desist Order by the FDIC and the State of Illinois Office of Banks and Real Estate, which was terminated on January 7, 2005. Nearly two years later, in December 2006, the bank consented to the imposition by the Financial Crimes Enforcement Network (FinCEN) of a $2 million civil money penalty, roughly a quarter of Foster's net income for 2005.
Executive Steps:
The Foster case is another in a series of "textbook" BSA/AML cases that provides stark lessons in the behaviors that bankers must avoid. The FinCEN document is only eight pages long, but lists several separate failures in Foster's AML/BSA program as it existed through August 2002. It should be on your "must read" list.
Once you have read the Foster document, share it with your senior managers. Ask them what a civil money penalty of a quarter of annual earnings would mean to their bank.
Review the adequacy of your BSA program's independent review.
Make sure your AML program controls won't miss violations like those described in the Foster case.
A Little Gift from Congress
Admittedly not the hottest topic we've seen, the enactment of the Financial Services Regulatory Relief Act of 2006 did cause at least a ripple of discussion. Most bankers would agree that there wasn't much to cheer about in the Relief Act, but some of the reporting requirements connected to the Federal Reserve's Regulation O and comparable rules of the other banking agencies were eliminated.
Executive Steps:
If your Compliance Officer hasn't already taken care of this pleasant chore, you can inform your executive officers that they (and principal shareholders) no longer have to file a year-end report of indebtedness to your bank's correspondent banks.
You can also inform them that the regulations no longer require them to report to your board indebtedness to other banks that exceeds the regulatory limits on credit they can obtain from your institution.
Did you know that you can receive announcements about new Executive Briefings via email? We have a special Executive Briefing email list. It's free! Click here to subscribe.
Don't miss a single issue of Executive Briefing. Below you will find a link to the archives page.
BankersOnline is a free service made possible by the generous support of our advertisers and sponsors. Advertisers and sponsors are not responsible for site content. Please help us keep BankersOnline FREE to all banking professionals. Support our advertisers and sponsors by clicking through to learn more about their products and services.
Print Friendly!
Email This Article!
Discuss NOW!
