Symptoms of the Schumer Box Syndrome

by Patricia Hewitt 0

Recently, The Pew Charitable Trust announced theformation of a new project designed to provide analysis andrecommendations on retail checking accounts in the U.S. http://www.pewtrusts.org/our_work_detail.aspx?id=1202

The Safe Checking in the Electronic Age Project aims torestore transparency, fairness, responsibility and free marketprinciples to one of the most common consumer financial products -the checking account.

As we wrote in a Research Note earlier this year (http://mercatoradvisorygroup.com/index.php?doc=Debit&action=view_item&id=574&catid=4),the introduction of new fees for retail checking accounts alsoserved to draw attention to the complexity of the terms andconditions connected to these accounts. The new Consumer FinancialProtection Bureau has defined retail banking as one of their focusareas. The addition of this new two year project launched by thePew Trust should serve as a blinking yellow light to the industryas it formulates new fee schemes and reshapes its business modelsin the coming years.

The industry isn’t simply waiting for regulators to lower the boomthough, for example, Bank of America may be on to something withtheir new overdraft alert feature http://www.finextra.com/news/fullstory.aspx?newsitemid=22526.Here’s where the industry is beginning to conceive of new uses formobile services and create opportunities for dynamic dialogues withconsumers.

Symptoms of the Schumer Box Syndrome include incomprehensible termsand conditions, fee constructs hidden in fine print, and fee waiverqualification road maps that require a GPS to navigate. The curefor this condition may not be a spoonful of sugar, but regulatorsalso have a responsibility to create clear rules and guidelinesbased, in part, on industry best practices as well as abuses.