800-809-2307
Four Letters. Infinite Potential.

A Cautionary Tale: Don’t Put Important Service Initiatives on Auto-Pilot

OVERCONFIDENCE CAN LEAD TO COMPLIANCE VIOLATIONS 

By Cheryl Lawson, EVP-Compliance Review

 



Conviction in your operations model is essential to establishing credibility and assuring both current account holders and prospects that you “know your stuff” when it comes to offering reliable financial services. But as the marketplace and regulations change, it’s important not to let overconfidence cause you to operate under outdated policies or misinterpret regulatory expectations that can knock you off your game in regard to compliance.

 

For instance, when was the last time your overdraft program was reviewed and evaluated? You may think everything is fine if no new policies have been issued and it is generating income. But, if you are allowing your program to operate with little or no additional oversight, you could be setting yourself up for potential missteps or even outright violations that can result in added regulatory scrutiny or costly fines.

 

Real-world situations and the consequences

In today’s world, compliance concerns are near the heart of just about any financial product or service. If you haven’t had any complaints or examiner criticism recently, you may think you are doing a great job. But regulations and best practices have changed over the years, as have the ways consumers access their accounts.

 

I recently met with an institution that had stopped sending overdrawn account status notifications to account holders, except for collection letters. When state regulators came to the institution, one of the examiners noticed that mailings were not being sent to heavy overdraft users. They told the program administrator that because the institution had not done anything to communicate with these program users, it was going to have to refund the fees charged to these accounts.

 

Had they simply continued to the proper notifications as per their established communications plan, they could have shown the examiner their efforts to notify these account holders of their account status and provided helpful information on other options available to help them reduce the number of fees they were paying.

 

In another instance, an institution allowed one account holder to overdraw their account more than 100 times with their debit card without paying any NSF fees because they had declined to opt-in to Reg E. Meanwhile, an account holder who had opted in for the extended coverage was paying a fee every time they overdrew their account with a debit card purchase. During its exam, the institution was cited for allowing accounts to exceed their overdraft limits, without officer authorization. What’s more, in the exit report, the institution was advised to rectify these situations to avoid the appearance of “disparate treatment” of its account holders—which could have caused it severe reputational damage.

 

The difference is in the details

A successful, compliant overdraft program is the sum of its parts. While you may be up-to-date on certain policies and procedures, if one aspect of the program is out of sync, it can have a negative impact on your overall success. And failure to provide consistent, accurate program information; overlooking opportunities to offer advice and alternative services to heavy overdraft users; not following established policies accordingly may lead to treating account holders differently or increasing their costs, can put you at risk for compliance violations.

 

A professional review of your program can uncover issues you never dreamed of or details that you thought were too small to address. Knowledgeable consultants can take an unbiased look to make sure your periodic statement disclosures and communications materials are compliant; ensure your fee and waiver policies are consistent for all account holders; help you determine if you have unauthorized overdrafts that need to be addressed; and much more.


 

12 months 2020 2020 vision 40 years abusive abusiveness Academy account holder account holder retention account holder strategies account holder strategies; growth strategies; account holders accountability Achieve achievements Advancements Advice Agreement analysis Analytics announcement Assistance ATMs Attendees attorneys attracting talent Automation B2B Balance Bank Bank of Pacific Banking banking services banks banks and credit unions batching Benefit best practices board governance board member board of directors Bob Layendecker bottom line branch equipment branch profitability branding Bryan Hanks budget bundling business business culture business environment business practices business processes business strategies career advice Career Goal case studies Case Study CEO CEO onboarding certainty CFPB Challenges change charitable Cher Cheryl Lawson Choose Chris Karstens claim clarity class action Classroom clients Cloud Cohron CommFirst Federal Credit Union commitment Communication communications communities community Community Outreach Referral Program Competition Competitive Complaint Compliance compliance examinations compliance risks compliant condition conduct Conferences Consistency Consistent consultant Consultation consulting Consumer Consumer FInancial Protection Bureau consumer protection Consumer-focused Consumers Contingency Contingency Pricing contingency-based fees Contract Contract Analysis Contract Negotiation contract negotiations Contract Optimizer Contract Renegotiations contract review contract staffing Contracts Convenience core processor contracts Cornerstone Credit Union League coronavirus corporate culture corporate governance costs Courtesy Pay COVID-19 CPE credits Credit Card credit card contracts credit cards Credit Union credit unions Crissandra Fry CSS culture customer service cyber security Damian Data Data Analytics database Deal debit card contracts Debt deceptive Decisions Demand Letters Deposit Development Dick Miller digital directors Disclosed disclosures discounts Discussion Dodd-Frank Act donation Donna Sumrall Dynamic economy Education efficiency studies election Email Emergencies Emergency employee employee retention employees EMV migration enforce enforcement Engagement Errors evaluation Evolve executive search Expectations Expense expense management expense reduction expenses Experience Expert expert negotiations Experts Facilitators FastTrack FDIC Federal Reserve Federal Reserve Board fee Feedback fees Financial Financial Institution financial institutions financial services financial stability Financial Worry FinTech Fixed limits Floyd's Forum Free Analysis full disclosure Fully fully disclosed overdraft program funds Gen Z Generating Income generating leads generation Generation Z Gift Goals governance government Grow Gym Halloween Hammond Happiness health hiring HKW Holiday Holidays HR HR policies Hubur human capital human resources Implementation important Improved improved efficiencies improved results Inc. income income enhancement Innovate Innovative Institution interests interview strategies interview tips IT contracts Jackson Jai Jai Darden James Jamone Moore Jan Southern Jennifer Peoples Jennifer Simmons Jim Griffis Jimmy Nguyen JMFA JMFA Academy JMFA clients JMFA News JMFA Next Generation Overdraft Privilege Joe Marsh John Cohron John M. Floyd John M. Floyd & Associates judicial justification Kelly Flynn Kennedy law lawsuits Lawyer leaders leadership Learn Learning Legal legislative lending program Lesson Limit Limits Literacy litigation litigators loans local Long Term Long-Term lost revenue Maggie Thompson Maintenance manage management Mark Roe marketing marketplace Matrix Matrix-based measurable measurable results Member Members Midwest Region Millennial Millennials Mississippi Missouri Mobile Banking monetary Money Most Valuable Provider NAFCU NCUA Negative Settlement Negotiate negotiating contracts negotiator Net Operating Analysis New Decade New Year New Year's Next Generation JMFA Overdraft Privilege NOA Non-Interest Income NSF fees OCC Oliver Ireland onboarding Online Opportunities Opportunity Opt-In Organizational Health Outcomes outsourcing Overdraft overdraft compliance overdraft coverage overdraft fees overdraft practices Overdraft Privilege overdraft privilege program overdraft program Overdraft programs overdraft protection programs Overdraft Protection Service overdraft service overdraft services overdraft strategy overdrafts Overspending Partner Paul McFarland paycheck emergency payday loans Payments Pennsylvania performance personnel plan planning Plus4 Credit Union Policy POS Positive Swipe practice practices Press Release Privilege Manager CRM proactive procedure process process improvement Processing product profitability Productivity Products Professional Profitability Improvement Program Program Management programs prohibited project staffing Promotions Proposals Provider providers Quality Reactive reality Recruitment Services recruitment strategies refer referral Reg E regional director regulation regulations regulators regulatory relationship Relationships Renegotiate Renewal Reporting Reputation resolutions Resources Results Retail Retaining Employees Retention Retirement revenue revenue enhancement review Richard Miller risk risks ROI Ron Jennings Roy Roy Seifert Rules Ryan Armstrong Sales Satisfaction savings secrets Security senate service service agreements service contracts service delivery Services Sessions settlement shareholders Sheila Bridges Shopping social distancing Social Events social media Software Solution Spending staff staff development staff spotlight staff training staffing staffing gaps staffing studies staffing study stakeholders standard Statistics Strategic Planning Strategies Strategy Stressful succeed Success success factors Succession plan succession planning Support survey Susan Prell talent team team members technology technology costs technology upgrades technology utilization temporary staff term Text third-party providers threat three Tim Strandquist Time Tools Tracking Trainer training transaction Transparency Transparent Travel Treats trends Trey Martin Trust UDAAP unfair updates Upgrades Value Variable Vendor vendor agreements vendor contracts vendor performance vendors violation Walker Washington Webinars weeks Westmoreland Community FCU Whitney & Company Wish list women work Workshops