Pew Charitable Trust recently examined how the top 50 banks in the United States handle certain disclosures to their accountholders. It specifically looked at how well banks communicate general terms and conditions, including fees, overdraft practices, and dispute processes. No bank achieved a 100 percent score, but a few came close such as Ally Bank, Bank of America, and Charles Schwab Bank. Pew concluded there is a great deal of inconsistency regarding disclosures and the organization is insisting the Consumer Financial Protection Bureau issue regulations that would standardize the information:
About 97% of the banks in the study has implemented at least one best practice. But, the study noted, there is still much room for improvement in the industry; 14 of the banks in the study did not even provide customers with disclosure of terms and fees for their account by mail or online. Customers of those banks could only get that account information by going to the branch, according to the study.
In this case, a best practice is defined as one that provides clear, concise information to consumers, reduces the incidence of overdrafts, and provides consumers with a choice other than mandatory arbitration when they have an intractable dispute. These financial institutions represent the majority of accountholders in the United States. According to an interview video posted on the Pew website, one of the report’s authors indicated that the CFPB receives approximately 1,000 complaints per month regarding checking accounts.
In a 2011 report we published entitled Selecting a Personal Checking Account: Enabling Fee to Value Comparisons, we suggested that as checking account fees become more prevalent, it may be time for the industry to adopt a Schumer Box approach. With little normalization in sight, it probably will take a new regulation to align the industry across best practices at some point.
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