|Article By: Ben Giumarra, Spillane ConsultingMake sure you’re safe here.
We all know Federal regulators are playing close attention to overdraft protection products. Take, for example, the CFPB’s report that 8% of consumers pay 75% of overdraft fees.There’s a lot to this issue – and we’ll probably see new regulations addressing it. If you’re worried about it, the FDIC’s 2010 guidance is a good place to start. Certainly, it can be a fair and honest service, not to mention a decent income-producer. But not unlike subprime lending, perhaps some institutions have abused it.Issue for Today: Waiving Overdraft Fees
Instead of trying to tackle everything related to overdrafts – I wanted to highlight one specific issue that seems to be popular in regulatory exams this year: the discretion surrounding when to waive overdraft fees.
At your organization, who decides whether to waive an overdraft fee? Are there clear standards in place to follow, or is there a lot of discretion provided to employees?
Yes, this can be a fair lending concern. Waiving an overdraft fee is considered an extension of credit and tested for fair lending compliance. “Of the 50 times overdraft fees were waived, does there appear to be any discriminatory trends in place?”
And it’s not like this issue hasn’t been around before – see page 15 of this OCC guidance.
Given that overdraft fees in general are already in regulatory cross-hairs, our recommendation is to have your product buttoned up with no loose ends. (We obviously would not recommend discontinuing a good service.)
So here’s what you can do, at least on this one specific issue:
You could also make sure to book this into your next audit, but I would expect that to already be included, even if not addressed directly.
In Other News
On My Mind …
Bank robbery is a disgusting and selfish act – putting innocent lives in serious danger. That’s why a bank robber getting caught is always reason for celebration here at SCA! But something we find particularly delightful is when the bank robber completely embarrasses himself in the process. Last time, we laughed together when the “Spelling Bee Bandit” who couldn’t spell the word “robbery” was caught. So consider this another installment in the bank robbery fail stories …
The police have arrested a bank robber known as the “Incognito Bandit” – full article by Boston Globe here. He earned this nickname by being particularly careful to hide his true identity during robberies- no footprints, fingerprints, etc. He’s been arrested specifically for the robbery of a TD Bank in Wayland, MA – but is suspected in dozens of other robberies.
So how’d someone so smart and careful get caught? Well when he was casing a bank up in Concord when a police officer ran his plates and impounded the vehicle due to expired insurance. Before he could get his car out of impound, the police had figured out who he was and they arrested him at the airport – just before he boarded a plane to South Africa. Well, that’s embarrassing … Hello Mr. Face, I’d like to introduce you to Senor PALM.
It’s true what they say, “bank robbery is not the thinking man’s game.”
“Intuition is hard to teach, but it can be learned if people are given permission to practice using it without intimidation.”
– Ray Davis