800-809-2307
Four Letters. Infinite Potential.
Best Practices Lead to Best Results

Best Practices Lead to Best Results

As regulators shift focus, fully disclosed financial services still matter

 

by Cheryl Lawson, EVP-COMPLIANCE REVIEW 

Following the recent passage of the Economic Growth, Regulatory Relief and Consumer Protection Act (S.2155 ) – which was intended to roll back some of the regulations of the Dodd-Frank law for smaller financial institutions – the Bureau of Consumer Financial Protection (Bureau) issued requests for information (RFIs) seeking comments on a range of topics related to its rulemaking authority. This follows multiple RFIs the Bureau has issued since the beginning of the year, under Acting Director Mick Mulvaney, to gauge reaction on how it is fulfilling its consumer protection function.

 

As a result, numerous industry groups, financial institutions, and individuals have weighed in with appeals for the Bureau to review its existing rules and rulemaking processes to possibly:

  • streamline regulatory requirements;
  • eliminate outdated or superfluous requirements;
  • adopt rules that are transparent, fully consistent with the law and focused on promoting the financial interests of consumers.

 

So, while regulators continue to fine tune existing rules and consider ways to relieve the regulatory burden on smaller financial institutions, what steps can banks and credit unions take to maintain confidence that their overdraft solution is actually working in the best interest of their account holders? Especially since earlier this year – after extensive review and on-going input – the Bureau removed any mention of a new ruling on overdraft programs from its Spring Rulemaking Agenda.

 

Stick with strategies that have proven results

By adhering to long-established Best Practices, you can rest assured that your institution’s overdraft program is in lockstep with regulatory and consumer protection expectations. Importantly – from a service quality perspective – this will also ensure that you are providing account holders with a responsible solution for meeting their financial service needs.

 

1.     Commit to Full Disclosure

With busy lives that are focused on work, family and personal obligations, sometimes consumers have difficulty keeping track of their checking account balance. Providing a clear explanation of the benefits and responsibilities of your overdraft service should be an essential element of your discussion during account openings. But it doesn’t stop there. 

Research tells us that in order to remember information, people need to hear it multiple times. This can be especially true when it pertains to something that isn’t top of mind every day. On-going communication about account status, overdraft program procedures, and fees can ensure less account holder confusion and lead to more effective program usage.

And providing overdraft users with instructions on how to contact account service personnel – if they have questions about an account, or need information on additional programs and account management options – is a great way to demonstrate your commitment to their financial well-being.   

 

2.     Use Policies That Are Fair and Balanced

Consumers rely on their bank or credit union to provide transparent, easy-to-understand and fairly priced service options. And regulators expect nothing less. You can increase account holder confidence in your service delivery and decrease your risk of potential examiner scrutiny when you implement overdraft program policies that prioritize excellent service over excessive fees and empower your account holders to maintain control of their finances.

 

3.     Monitor Who’s Using the Program and How It’s Being Used

Maintaining accurate tracking of account activity is essential for effectively managing a successful overdraft strategy. For best results, program software should provide comprehensive, easy-to-use reports that identify benchmarking data on usage trends, as well as insight into the program’s overall performance. This will allow you to make adjustments in areas where improvements can be made.

Another feature to look for is the ability to automatically distribute account holder communications materials to keep program users informed about their account activity. If your program does not offer this level of information, then you probably aren’t getting optimal results and your account holders aren’t getting a fully disclosed solution.

 

4.     Know How to Explain It

The secret sauce of an effective, fully compliant overdraft solution is having well-informed employees who possess a complete understanding of how your program works, as well as the ability and confidence to convey that message accurately to account holders.

Keep in mind, successful employee training programs take into account the scheduling, logistical and knowledge-level needs of your team. The availability of in-person and web-based training, as well as group and one-on-one sessions also ensures that all participants will benefit no matter what their learning style.


Partner with an expert for best overall outcomes

It all boils down to this. It’s much easier to remain between the lines of consumer protection expectations when you work with an overdraft program provider that maintains the highest level of compliance knowledge and an on-going awareness of what’s happening in the regulatory landscape.

And when the program’s processes, procedures, and pricing are based on Best Practices, it becomes a valuable financial service that positively impacts an account holders’ ability to maintain financial stability and a worry-free, compliant source of non-interest income for banks and credit unions.

 

100% 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 class-action lawsuit 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 report 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 Industry Innovate Innovative Institution integrity 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-Compliant Non-Interest Income NSF fees OCC Officer 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 Regulation E regulations regulators regulatory relationship Relationships Renegotiate Renewal Reporting Reputation resolutions Resources Results Retail Retaining Employees Retention Retirement revenue revenue enhancement review Richard Miller Right risk risks ROI Ron Jennings Roy Roy Seifert Rules Ryan Armstrong Sales Satisfaction savings Scrutiny 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 Thing Third-Party Expert 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