We just had a seminar on UDAAP and we are concerned about are daily insufficient fund charges for insufficient funds and returned item fees per day.

What would be an acceptable Cap on this. I have seen 3 or 5 days.

Thanks

Some corrections to my last post:

We just had a seminar on UDAAP and we are concerned about our daily fund charges for insufficient funds and returned item fees per day.

What would be an acceptable Cap on this. I have seen 3 or 5 per day.

Thanks

This is a hot button right now. When is enough, enough? I don't have an exact answer for you. Guidance suggests that 6 per 12-month period is excessive and requires action.

What types of transactions are causing the overdrafts? 3 or 5 per day suggests that the customer may not be aware he/she is overdrawing. Do you call customers when they overdraw? Do you offer automatic alerts? Is this normal behavior for the customers in question? What is your disclosures maximum overdraft charges per day? Are you exceeding this?

I think you should speak with these customers, provide references for couseling, offer other products (e.g., transfer from savings) that could save them money, or develop ways to "catch" these people before they get up to that 3 to 5 ODs per day.

There are probably more questions than answers. Of course, you can always give them warning to stop and, ultimately, close the account if they do not.

As to what number to use for your daily cap, well that's really something you need to analyze and come up with for your bank, based on your size, complexity, amount of actual OD charge, area competition, etc. You will want to determine the fee cap that works for your bank within your market area, and then have a good explanation for why you selected that number as your cap.

What I did was poll BOL in general (link below) and also polled all of our local competitors (small, medium, and large banks), then looked at the amount of our OD charge, and how that stacked up to the competitions' OD charges. We used that market information to come up with our cap of 5 per day, and worte down our analysis of how that saves consumers money and makes us a better choise than our competitors (since we are cheaper than them on all counts). My examiners were fine with our cap and my analysis.

Just be sure to address all areas of the guidance if you are FDIC regulated, and have good analysis to back up how you approach everything (fee amount, caps, de minimis, excessive use follow-up, etc). And it's best to put it all in writing.

http://www.bankersonline.com/forum/ubbth...rue#Post1558465