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#2256046 - 06/28/21 04:40 PM Still Charging Excessive Transaction Fee?
TMatt87 Offline
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We are having internal discussions on whether to start charging the excessive transaction fee on savings accounts, even though we don't have to monitor for excessive transactions anymore. If the polling feature still worked, I'd use a poll, but I'm curious what other FIs are doing.

Are you currently, or do you plan to charge for excessive transactions?
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#2256047 - 06/28/21 04:46 PM Re: Still Charging Excessive Transaction Fee? TMatt87
Skittles Online
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We do right now - and never stopped.

During our recent deposit compliance audit it was recommended verbally that we consider dropping the fee. The thought is that since there are no more regulatory requirements why are we charging this fee? Her concern, and that of her firm, are that this could become a UDAAP (or UDAP) issue at some point in the future since they are no longer being tracked or monitored.

Just food for thought.
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#2256049 - 06/28/21 05:23 PM Re: Still Charging Excessive Transaction Fee? TMatt87
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I don't want to sidetrack this discussion but the Fed was pretty clear that this isn't going to impact the decision to charge a fee or not. A UDAP angle could occur if the bank tells the customers the government requires the fee.

From the Fed FAQs:

Suppose that a depository institution currently has policies or provisions in their savings deposit account agreements pursuant to which the depository institution charges fees to savings deposit customers for transfers and withdrawals that exceed the six-transfer limit. May a depository institution that suspends enforcement of the six-transfer limit continue to charge these fees when savings deposit customers make seven or more convenient transfers and withdrawals in a month?

Regulation D does not require or prohibit depository institutions from charging their customers fees for transfers and withdrawals in violation of the six-transfer limit. Accordingly, the deletion of the six-transfer limit does not have a direct impact on the policies or account agreements of depository institutions that charge such fees to their customers.
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#2256050 - 06/28/21 05:24 PM Re: Still Charging Excessive Transaction Fee? TMatt87
rlcarey Online
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I think your auditor needs to explain themselves.

Do they also suggest that you drop charging any other per item charges on your checking accounts too, since there are no regulatory transaction restrictions.

Usually savings account are designed with very low monthly maintenance fees (if any) because they are designed not to have many transactions. If you have a low monthly maintenance fee - why is not a transaction fee justifiable and how is a properly disclosed fee a UDAAP when the deposit accountholder is in total control and how can that be deceptive?
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#2256101 - 06/28/21 11:07 PM Re: Still Charging Excessive Transaction Fee? TMatt87
TMatt87 Offline
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We stopped charging during the pandemic, but with margins still squeezed, we're looking for non-interest income wherever we can. We would like to start charging the fee again, but want to know what other FIs are doing to support our decision one way or the other.
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#2256103 - 06/28/21 11:54 PM Re: Still Charging Excessive Transaction Fee? TMatt87
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I have seen institutions stop charging and then resume, institutions that continue to charge, and institutions that stopped charging with no plans to resume. I haven't see any criticism in any of the range of circumstances from a regulatory perspective. Its really an individual decision for the institution.
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#2256326 - 07/06/21 05:14 PM Re: Still Charging Excessive Transaction Fee? TMatt87
John Burnett Offline
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If a bank wants to continue depending on law savings withdrawal/transfer activity as a reliable funding source for lending, it would make sense to put back some sort of transfer/withdrawal limit and charge when a customer exceeds it. If the limit is clearly disclosed and the the fee explained and correctly disclosed, there simply is not a UDAAP issue here.

A wise bank that wants to reinstate limits and fees would make the limits simpler to understand than the old run-on sentence that used to be in Reg D. And if the programming of the fee is done correctly, there would be no monitoring needed.
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#2256332 - 07/06/21 06:41 PM Re: Still Charging Excessive Transaction Fee? John Burnett
InFairness, CRCM Offline
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Originally Posted by John Burnett
And if the programming of the fee is done correctly, there would be no monitoring needed.

Unless staff are permitted to override or waive the fees.
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#2256439 - 07/08/21 06:43 PM Re: Still Charging Excessive Transaction Fee? TMatt87
John Burnett Offline
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That's true, of course, but we were focused on compliance and there are no compliance issues here any longer.
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#2260764 - 10/05/21 11:19 PM Re: Still Charging Excessive Transaction Fee? TMatt87
TMatt87 Offline
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If we kept the fee listed in our terms and conditions for deposit accounts and now want to reinstate it, would we be required to provide notice to all account holders? I know from a customer service perspective, it would be good to provide notification, but we are wondering if we can just post a notice on our website and mobile app.
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#2260795 - 10/06/21 02:48 PM Re: Still Charging Excessive Transaction Fee? TMatt87
John Burnett Offline
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If you notified them of the suspension, you should notify them of the reactivation of the fee. Website and mobile app are okay, but add a statement message, too.
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#2260821 - 10/06/21 05:38 PM Re: Still Charging Excessive Transaction Fee? TMatt87
TMatt87 Offline
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We didn't notify them of the suspension, we just stopped charging it. Our savings statements go out quarterly, and the next one isn't until the end of December. Executives don't want to wait that long if we don't have to, but we are concern with UDAAP if we don't send a notice.
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#2261040 - 10/12/21 07:51 PM Re: Still Charging Excessive Transaction Fee? TMatt87
John Burnett Offline
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You cannot go wrong by sending them a notice that you're lifting the suspension, and I would argue for a notice given the many months during which you've suspended the charge.
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#2261495 - 10/22/21 08:52 PM Re: Still Charging Excessive Transaction Fee? TMatt87
TryingtoComply Offline
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We stopped for a time during the pandemic and before we started again we gave more than 30 day's notice under the advice of legal counsel to avoid a potential UDAAP/UDAP issue. We have had no complaints from customers and we are charging the same fee we charged when the monitoring requirement was in place.

During our recent deposit compliance audit it was recommended verbally that we consider dropping the fee. The thought is that since there are no more regulatory requirements why are we charging this fee? Her concern, and that of her firm, are that this could become a UDAAP (or UDAP) issue at some point in the future since they are no longer being tracked or monitored.

So we are supposed to offer FREE savings accounts? Your auditor's assertion that charging a fee for a savings account may become a UDAAP/UDAP issue is ridiculous. If he/she was so confident they why make the recommendation verbally?
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#2261501 - 10/22/21 10:11 PM Re: Still Charging Excessive Transaction Fee? Skittles
InFairness, CRCM Offline
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Originally Posted by Skittles
We do right now - and never stopped.

During our recent deposit compliance audit it was recommended verbally that we consider dropping the fee. The thought is that since there are no more regulatory requirements why are we charging this fee? Her concern, and that of her firm, are that this could become a UDAAP (or UDAP) issue at some point in the future since they are no longer being tracked or monitored.

Just food for thought.

If accurately and properly disclosed, how is this a UDAAP?

The only regulatory push back I've heard on charging the fee is from a friend at another bank, where the FDIC issued an MRA in an exam because 2021 product brochures still said the fee was a regulatory requirement. The problem was not charging the fee, but citing a regulatory rationale that has not existed for a year.
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#2261502 - 10/22/21 10:28 PM Re: Still Charging Excessive Transaction Fee? TMatt87
rlcarey Online
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because 2021 product brochures still said the fee was a regulatory requirement

Well that would have earned a MRA at any time since "a fee" was never a requirement.
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#2261565 - 10/25/21 09:22 PM Re: Still Charging Excessive Transaction Fee? TMatt87
John Burnett Offline
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And of course, you are not expected to provide free savings accounts, and you may also want to discourage treating them like spending accounts to help stabilize deposit balances for your ALCO planning.

Your regulator or auditor's principal compliance concern should be that you are disclosing what you do and doing what you disclose.
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#2261599 - 10/26/21 05:19 PM Re: Still Charging Excessive Transaction Fee? rlcarey
InFairness, CRCM Offline
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Originally Posted by rlcarey
because 2021 product brochures still said the fee was a regulatory requirement

Well that would have earned a MRA at any time since "a fee" was never a requirement.

I should have been more precise in my statement. The exact wording was "Regulatory requirements force us to limit transfers from interest-bearing accounts to transaction accounts to six per month. If you exceed six transfers per month, we will assess a fee . . ." The brochure in question was updated in June 2021, after the FRB rescinded the transaction limits and monitoring.
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#2261604 - 10/26/21 05:36 PM Re: Still Charging Excessive Transaction Fee? TMatt87
rlcarey Online
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I still would have written you up as paying interest on an account had nothing to do with the transaction limitations imposed under Regulation D. That statement was not true either. But I was always a hard-arse auditor. smile
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