FDIC Finalizes New Overdraft Guidelines Over Industry Objections

by Mercator Advisory Group 0

The Federal Deposit Insurance Corporation (FDIC) issued a new set of guidelines for how banks should manage automated overdraft programs.

The major concern voiced by community bankers is that is would create a burdensome manual process, affect their customer relationships and put them at a competitive disadvantage to other institutions such as credit unions that are not regulated by the FDIC.

The new guidance, first issued in an August proposal that was essentially unchanged, says FDIC-supervised institutions should closely monitor their automated programs, actively inform chronic overdraft users of alternatives and allow opt-outs from nonelectronic overdraft programs. The guidelines, which exempt so-called ad hoc programs, follow earlier Federal Reserve Board restrictions on overdrafts stemming from ATM and point of sale transactions.

Richard Riese, the director of the American Bankers Association’s center for regulatory compliance, suggested the guidelines go beyond what has been accepted federal policy on overdraft restrictions.

“While it invokes some acceptable general principles, its tone and specifics threaten to heighten supervisory risks by setting expectations that overreach the authorized regulatory standards for these programs,” he said. “It creates an expectation of intensive monitoring with personal customer intervention on what could be a recurring schedule, when customers clearly understand that they’ve elected a program and are willingly incurring the fees. On top of this, the expectation is that people will be harassed in person or by telephone about whether they really understand that they’re paying overdraft fees.”

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The FDIC press release and the Overdraft Guidance PDF can be found here:


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