Thread Options
|
#1427281 - 08/11/10 03:42 PM
overdraft privilege
|
Gold Star
Joined: Aug 2004
Posts: 394
oklahoma
|
We are wanting to implement an overdraft privilage program up to $ 1,000.00 for all consumer checking accounts. Do we have to notify each account holder before this can be implemented.
This would be in addition to the opt in requirements for ATM withdrawals and one time debit card transactions.
|
Return to Top
|
|
|
|
#1427385 - 08/11/10 04:49 PM
Re: overdraft privilege
parr04
|
10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
|
If there is one universal criticism of the "overdraft privilege" programs implemented by banks, it is a failure of some banks to inform consumers they are being given the service. Right behind it on the pet peeve list is some banks' unwillingness to let consumers opt out of the service if they don't want it. If you were to ask the average consumer, he or she would say don't sign me up unless I opt in.
I know that there is no current requirement that you provide an opt-in for such programs (other than for coverage of card transactions, which you've acknowledged), and the provision of an opt-in for non-card transactions (or an opt-out) is so far only a best practice (see the February 2005 Guidance documents), but I do encourage you to provide an opt-out, at least.
_________________________
John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
|
Return to Top
|
|
|
|
#1427523 - 08/11/10 06:29 PM
Re: overdraft privilege
rlcarey
|
10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
|
How very timely of them. A few months ago, when the OTS issued its proposed Supplemental Guidance on this topic ( Proposed Supplementary Guidance on Overdraft Protection Programs, 4/29/10), I predicted the other regulators could not be too far behind. The FDIC has now dropped the other shoe. Both Supplementary Guidance documents are, so far, in the proposal stage. The FDIC is inviting comments through 9/27/10. The message in these proposals, as Randy says, is pretty clear: If you aren't taking the 2005 Guidance seriously yet, you're about to get a wake-up call.
_________________________
John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
|
Return to Top
|
|
|
|
#1427536 - 08/11/10 06:35 PM
Re: overdraft privilege
rlcarey
|
10K Club
Joined: Aug 2001
Posts: 21,939
Next to Harvey
|
Thanks, I had not spent any time in my in-box this morning. I read it. Then, I re-read it.
I've concluded that the FDIC, following the Fed's lead, has decided, "Statutes, we don't need no stinking statutes! We're going to make up our own rules."
I think "overdraft protection" programs suck and I always have. My frustrations are as a trainer, it's impossible to train on compliance issues when examiners are empowered to run amuck. These points in particular:
•Monitor accounts and take meaningful and effective action to limit use by customers as a form of short-term, high-cost credit, including, for example, giving customers who overdraw their accounts on more than six occasions where a fee is charged in a rolling twelve-month period a reasonable opportunity to choose a less costly alternative and decide whether to continue with fee-based overdraft coverage; •Institute appropriate daily limits on overdraft fees;
are way too specific to fit under the heading of "guidance." Examiners will "enforce" them.
_________________________
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.
|
Return to Top
|
|
|
|
#1427610 - 08/11/10 07:23 PM
Re: overdraft privilege
Elwood P. Dowd
|
Diamond Poster
Joined: Sep 2008
Posts: 2,474
Midwest
|
Those two points were the same exact points I hightlighted in a memo to management. We currently do our program on an ad hoc basis. We have a employee who looks at the items daily and then makes a decision to pay or return. The guidenace addresses that ad hoc programs are not the focus of the guideance but I think they make it pretty clear that you need to follow.
|
Return to Top
|
|
|
|
#1427632 - 08/11/10 07:51 PM
Re: overdraft privilege
ahkcompliance
|
10K Club
Joined: Aug 2001
Posts: 21,939
Next to Harvey
|
I'm fascinated that they even suggest "ad hoc" programs are more consumer friendly. My experience is dated, but there were some customers who, if they were not on the overdraft list this morning, I knew they were on vacation.
As you note, these two things are as relevant to ad hoc programs as they are to the truly predatory offerings.
_________________________
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.
|
Return to Top
|
|
|
|
#1427648 - 08/11/10 08:02 PM
Re: overdraft privilege
Elwood P. Dowd
|
10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
|
And the end result? More unbanked consumers. Very anti-CRA when you really think about it.
_________________________
My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
|
Return to Top
|
|
|
|
#1427729 - 08/11/10 08:51 PM
Re: overdraft privilege
RR Joker
|
Power Poster
Joined: Apr 2005
Posts: 3,663
TN
|
And the end result? More unbanked consumers. Very anti-CRA when you really think about it. Not for long....they have that new pilot program coming out where you can't charge any OD fees......and it has to be cheap so banks can be more available to the unbanked.....
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.
|
Return to Top
|
|
|
|
#1427754 - 08/11/10 09:16 PM
Re: overdraft privilege
Dani York, CRCM
|
10K Club
Joined: Jul 2001
Posts: 83,368
Galveston, TX
|
" We currently do our program on an ad hoc basis. We have a employee who looks at the items daily and then makes a decision to pay or return."
More consumer friendly maybe, but just be aware that an overdraft is a credit product that is covered under Regulation B. Ad hoc payment of ODs could set yourself up for some fair lending concerns.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com
|
Return to Top
|
|
|
|
#1427763 - 08/11/10 09:25 PM
Re: overdraft privilege
Dani York, CRCM
|
Diamond Poster
Joined: Sep 2008
Posts: 2,474
Midwest
|
Not for long....they have that new pilot program coming out where you can't charge any OD fees......and it has to be cheap so banks can be more available to the unbanked..... [/quote]
Where I can see about this pilot program?
|
Return to Top
|
|
|
|
#1427786 - 08/11/10 09:48 PM
Re: overdraft privilege
ahkcompliance
|
10K Club
Joined: Aug 2001
Posts: 21,939
Next to Harvey
|
This will get you started. They are soliciting participation in what could be called beta testing and, oh goody, you might get CRA credit. This type of "Basic Banking" account was a big deal a couple decades ago, but it simply slipped under the waves. Hmmm, sounds negative. I'm not opposed to the idea, it's little more than common sense. I'm just tired of regulators who have lost their way and see themselves as financial social workers for people who could not care less.
_________________________
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.
|
Return to Top
|
|
|
|
#1427821 - 08/11/10 10:38 PM
Re: overdraft privilege
Elwood P. Dowd
|
10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
|
.... I'm just tired of regulators who have lost their way and see themselves as financial social workers for people who could not care less. And to think we used to let Congress fill that role. And somewhere back in the dusty shelves of my memory, people used to assume responsibility for their own actions. I think that was somewhere back before the '60s.
_________________________
John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
|
Return to Top
|
|
|
|
#1427892 - 08/12/10 12:35 PM
Re: overdraft privilage
John Burnett
|
Power Poster
Joined: Nov 2001
Posts: 7,984
FINALLY ABOVE the gnat line
|
I think everything started going downhill in the 80's when "highly leveraged" was no longer a bad thing.
_________________________
"Once you learn to read, you will be forever free." - Frederick Douglass
My Opinion Only.
|
Return to Top
|
|
|
|
#1427906 - 08/12/10 12:56 PM
Re: overdraft privilage
waldensouth
|
Georgia Plum
Unregistered
|
I'm a little confused with the FIL that came out. Two things
1. Is this 'guidance' only for those institutions with true overdraft payment programs? 2. The guidance starts out talking about consumer accounts, but one bullet point "Monitor accounts and take meaninful and effective action to limit use by customers (emphasis mine) ..... does this mean all accounts including business?
I'm thinking early retirement!
Last edited by Georgia Plum; 08/12/10 01:04 PM.
|
Return to Top
|
|
|
|
#1427936 - 08/12/10 01:20 PM
Re: overdraft privilege
|
10K Club
Joined: Aug 2001
Posts: 21,939
Next to Harvey
|
As ahkcompliance notes above, the guidance says it is not aimed at "ad hoc" programs. So, it is generally aimed at institutions that promote overdrafts. Regardless, ahk's observations that some elements affect all banks are simply correct.
I believe their only concern is consumer accounts, but note that the missing adjective is of some concern.
These are issues that should be raised in comment letters. (Commenting on proposed guidance? These people are eaten up.)
_________________________
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.
|
Return to Top
|
|
|
|
#1434809 - 08/26/10 06:09 PM
Re: overdraft privilege
Elwood P. Dowd
|
100 Club
Joined: Jun 2010
Posts: 118
Cleveland, TN
|
Too Tall, If i were implementing this product (which I did in 1998), I would give all consumers 30 day notice. You can do that in the form of a statement stuffer to save some postage, however that will take you 60 days to notify them all with appropriate notice. We implemented the program on business accounts several years ago with good results. We are not aggressive and do not "push" or advertise this product. It is merely a "benefit" of our accounts.
_________________________
Christy Griffith
|
Return to Top
|
|
|
|
|
|