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December 3, 2014
Overdrafts: Latest Regulatory Feedback, Guidance & Best Practices Webinar
David Dickinson and Jerod Moyer

December 4, 2014
Freebies, Bonuses and Contests
John Burnett and Andy Zavoina

December 9, 2014
Bankruptcy: Creditor Do's and Don'ts
Sam Ott

December 10, 2014
Branch Audits: What Is Going On Out There?
Patricia Cashman

December 11, 2014
Setting up New Accounts for Trusts
Mary Beth Guard

December 17, 2014
Integrated Disclosures - An Implementation Strategy
Mary Beth Guard and Jack Holzknecht

December 18, 2014
Loan Review Best Practices for a Community Bank
Bob Fritzlan

December 19, 2014
PREPAID PRODUCTS - Understanding the CFPB Proposal
John Burnett



Topic Options
#1359390 - 03/17/10 04:31 PM NSF fee caps
Vander Offline
100 Club

Registered: 07/03/03
Posts: 154
Loc: Texas
We have a NSF fee cap for our overdraft protection program based on the 2005 joint guidance on ODP programs:

Consider daily limits on the consumerís costs. Consider imposing a cap on consumersí potential daily costs from the overdraft program. For example, consider limiting daily costs from the program by providing a numerical limit on the total overdraft transactions that will be subject to a fee per day or by providing a dollar limit on the total fees that will be imposed per day.

We imposed the cap after a FDIC exam several years ago and I'm curious if other banks have been recently criticized for not having a cap or if we just got a "difficult" examiner.

The question came up because of the new Reg E requirements. We have a cap for our ODP program, but not for regular overdrafts/NSFs --- which is going to cause issues with our opt-in notice language or require us to have 2 separate opt-ins.

I'm just curious what other banks are doing.

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Operations Compliance
#1359433 - 03/17/10 04:52 PM Re: NSF fee caps [Re: Vander]
BrianC Online
Power Poster

Registered: 11/26/04
Posts: 2921
Loc: Illinois
If your regular overdrafts/NSF terms are less favorable to the consumer because they do not offer a fee cap, your program could be considered in violation. The Reg requires the "
Same Account Terms, Conditions, and Features" be offered to opt-out and opt-in customers.

Depending on your concerns from the exam in question, either do away with the fee cap or add the fee cap to the opt-out customers.
_________________________
I can do all things through Him who gives me strength. (Phillipians 4:13)

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#1359475 - 03/17/10 05:23 PM Re: NSF fee caps [Re: BrianC]
John Burnett Offline
10K Club

Registered: 10/27/00
Posts: 30886
Loc: Cape Cod
I don't think the question was about having a different pricing schedule for opt-in vs. non-opt-in customers. Vander's bank currently has two overdraft services -- one is a courtesy overdraft program with a fee cap, and the other is old-fashioned overdraft management as it existed "back in the day" before courtesy overdraft programs.

Vander, what do you do with card transaction authorization requests for cardholders who are not in your courtesy overdraft program? Do you routinely deny them if they would overdraw the account?
_________________________
John S Burnett
BankersOnline.com

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#1359492 - 03/17/10 05:38 PM Re: NSF fee caps [Re: John Burnett]
Vander Offline
100 Club

Registered: 07/03/03
Posts: 154
Loc: Texas
Yes John. If the customer doesn't have enough money in their account, ODP program or no ODP program, the transaction will decline. They can only access the ODP program limits at the teller line or if they write a check.

I brought this fee cap up in a local compliance group meeting last week and I was the only bank in the room with a cap. So, I was curious what my fellow BOLers were doing. It doesn't appear to be a standard examiner requirement. I understand the guidance says to "consider" the cap, but we were encouraged (as in "do it") by the examiner because of the joint guidance.

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#1359860 - 03/18/10 11:40 AM Re: NSF fee caps [Re: Vander]
John Burnett Offline
10K Club

Registered: 10/27/00
Posts: 30886
Loc: Cape Cod
OK, so there's no problem with different treatment (crowman3's concern). In fact, there's no Reg E opt-in needed here at all. You will need to ensure that your bank will not assess an OD fee if you get stuck with one of those "under the radar" debit card transactions.

As for your examiner's nudge, I can only say that some examiners are more emphatic or forceful or convincing than others and some banks are more able than others to deal with examiner encouragement.
_________________________
John S Burnett
BankersOnline.com

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#1359976 - 03/18/10 01:38 PM Re: NSF fee caps [Re: John Burnett]
Ken_Pegasus Offline
10K Club

Registered: 08/30/01
Posts: 17520
Loc: Another trip around the sun
I've had occasion to meet with representatives of about 80 different community banks in the last few days. Only one had a "cap."

Interestingly enough, confronted with the requirement to disclose the cap for the first time in the Reg E notice, that bank is going to do away with it.

It was "Guidance," not a directive. You're entitled to say, "No."
_________________________
"Oh God, they sea is so great and my boat is so small." Breton fisherman's prayer in JFK's office.

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