Compliance Blog

Written by Steve Van Beek

The CFPB released a press release yesterday extolling the importance of transparency for checking accounts:

"This isn't about any one fee from any one bank.  The problem is that checking accounts often come with a wide variety of unexpected costs that can quickly add up for consumers.  Different banks charge different fees. Different fees are applied under different terms and conditions. Different banks give different names to the very same fee.  So it is no surprise that a recent survey by Pew Charitable Trusts found that nearly three-fourths of Americans with checking accounts support greater clarity and disclosure.  

“Ideally, consumers would have a simple way to evaluate checking account costs. The CFPB has the ability to simplify checking account disclosures – an idea that some consumer groups and some banks have already been developing. Making the costs transparent is good for consumers and good for competition. It allows consumers to compare the checking account options from large banks, community banks, and credit unions and pick the one that works best for them."  (emphasis added).

Regardless of how the politics of Bank of America's $5 fee for debit card use plays out, one thing is clear - there will be changes to checking accounts in the near future.  As Mr. Date stated, the CFPB already has the regulatory authority to amend Truth in Savings disclosures.

The statement is not long - but there are some hints as to what the CFPB might do.  For example:

"Different banks give different names to the same fees."   

To me, this looks like the CFPB is getting ready to require an industry standard for "overdraft fees."  The days of referring to these fees as "courtesy pay" fees might be limited.  

We won't know for sure until the CFPB acts - but these are not the first inklings of a renewed focus on Truth in Savings disclosures.

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Back in May, we blogged on the possibility of a "Schumer Box" for checking accounts.  Senator Schumer introduced legislation that would mandate upfront disclosure - similar to credit cards (TheHill.com):

"Sen. Charles Schumer (D-N.Y.) is introducing legislation that would require banks to clearly display all possible fees on checking account applications.

Schumer, who introduced the legislation on Monday, said a report last week by the Pew Charitable Trusts showed that half of all checking fee disclosure statements provided to new customers from the 10 largest banks are more than 100 pages long.

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The Pew report found that, for example, there are seven different terms used by the 10 largest banks to describe overdraft fees, making it difficult for consumers to compare overdraft policies."  

There is that same Pew Charitable Trust study - and Senator Schumer also focused on the different terminology used throughout the financial services industry to describe overdraft fees.  

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In April, we discussed a report by the Public Interest Research Group (PIRG).  The PIRG Report provided direct recommendations to the CFPB:

"The new Consumer Financial Protection Bureau has an important opportunity to make markets work better for consumers and good actors in the marketplace; it should make bank account fee disclosures more transparent by enforcing the current law and improving the law’s disclosure requirements.

- The CFPB should extend the requirements of the Truth In Savings Act to the Internet. It should require that banks post fees in a searchable web format (e.g., xml or similar), to encourage the establishment of local online shopping guides by community groups.
- The CFPB should require that the most important savings and checking disclosures required by the Act be provided prominently in a tabular format, such as the “Schumer Box” required for credit card disclosures."

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If you are having trouble sleeping, below are additional links with ideas that some consumer groups have been suggesting to the CFPB regarding checking accounts.

The full PIRG Study can be found here.   

The full Pew Charitable Trust study on Safe and Transparent Checking Accounts is here.  

One example of the kind of Schumer Box being suggested can be found here.

Here is a letter sent by Pew (and other groups) to the CFPB a couple of weeks back asking the CFPB to prioritize checking account disclosures.  

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At this point - it is pretty clear the question is not whether there will be changes to Truth in Savings disclosures.  Rather, the question is now when we will see changes.