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Guidelines on Waive/Charge and Ad-Hoc Overdraft

Answered by: 
John Burnett

Question: 
Does Reg B/Reg O/Reg E address an ad hoc overdraft decision process? If we choose to waive OD/NSF fees for a customer with what we believe is a profitable relationship and charge those customers who are less profitable, could this be seen as an unfair practice? Should we have an established guideline on when to waive and charge?
Answer: 

If you are going to allow waivers of overdraft fees beyond the correction of errors, etc., it's definitely a good idea to have established policy or guidelines for a couple of reasons. First, every bank has employees who exhibit a range of customer-service styles -- OK, I won't mince words: there are hard-liners and there are those who will bend over backwards for customers -- and the bank needs to establish norms and accountability lest waivers get out of control. Second, the bank needs to ensure that waivers don't create even the appearance of unfair treatment. After all, a customer relationship can be profitable to the bank either because of balances or because of fees (or a combination of both).

First published on BankersOnline.com 10/24/11

First published on 10/24/2011

Filed under: 
Compliance
Filed under compliance as: 
Fees
Waivers

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