We have FDIC onsite and they are / keep asking for reports related to overdraft fee reversals. Does anyone know why? Are they trying to determine if we have unfair practices in the way that we refund fees or that we don't consider them?

Sorry, not sorry. Overdrafts is a pet peeve of mine. I just don't think it's the bank's business to baby sit grown adults - if you don't have the money - don't spend it. Simple as that. We have a de minimis, we have a cap, our fee is lower than most, we counsel, send notices, offer alternatives, etc., etc., ---- so why this?

An overdraft is a loan and is subject to Regulation B. Fair lending considerations is probably where they are heading if you are waiving OD fees willy-nilly.

Original poster, I would be interested in knowing more about this and where they were going with it if you would post for all or PM me.

Interesting, you comment "waiving willy-nilly" - so, is there guidance on this? Would we follow lending guidance for waiving overdraft fees?

not sure if you have been following the news about what some of the big banks (and quite a few smaller banks as well) have done over the past few years about OD fees, how much money is at stake, how banks have changed posting order to their benefit to increase fee revenue, and a host of other items along this line. Don't let your pet peeve dig a regulatory hole that your bank would have to climb out of.

so, yes, the regulators are looking to see that your bank has an actual process, that it meets the definition of reasonable, that it is followed, that exceptions are addressed, and that it is not done in a way that hinders your customer base while increasing the banks revenue.

at our last exam this was a BIG focus as well - they were looking for Fair Lending - UDAAP.

Another anon here - agree with the others above, but, don't let examiners bully you into manually producing a non-existent report. They can ask you for a "reverals report" until the cows come home, but if it doesn't exist, it doesn't exist. They are free to go manually review a sample of a hundred overdrafts and identify the reversals by hand.

In the meantime, I'd drop everything on my calendar and do that myself. Document for them a sample (perhaps 20, or 50 cases) of overdrafts, and show if any had the fees reversed. If any did have a fee reversal, document 5 different ways why the customer qualified vs the customers who did not qualify or receive the reversal.

a) this customer requested refund, the others didn't
b) customer who got refund has had an account since 2003, the customer who didn't just opened it in 2019
c) customer who got refund also has a business account or CD with $100,000 in it
d) customer who got refund told us he/she was in hospital

Basically treat their unreasonable request as a trigger to do the exam for them. If you can document for them that you are on top of this issue, they will stop digging.

Possible exam finding should be, at worst: bank agrees to perform quarterly monitoring of fee reversals, or, requires upper-level approval for fee reversals, etc. This is an OD practices risk mitigation issue; don't let them steer it towards UDAAP.

Also share with them CFPB's clarification of "abusive" released this week (which is a much weaker standard than before, since it's no longer arbitrary and subjective).

I'd love to hear more about what the examiners were looking for.