Regulatory Comment: Consumer Financial Protection Bureau — Streamlining Inherited Regulations
Pew's Safe Checking in the Electronic Age Project is engaged in research related to the financial access activities that fall within the Consumer Financial Protection Bureau's (CFPB) scope. This project has conducted extensive research on the terms and conditions of checking accounts. This research can inform the CFPB's efforts to streamline inherited regulations.
Pew is urging the CFPB to streamline the Truth in Savings Act (TISA)
- by requiring all financial institutions to provide consumers with a short, clear, and understandable summary of key terms, conditions, and fees and,
- by requiring the use of standard language to describe overdraft penalty fees, overdraft transfer fees, and extended overdraft fees.
1 Brian K. Bucks, Arthur B. Kennickell, Traci L. Mach & Kevin B. Moore, “Changes in U.S. Family Finances from 2004 to 2007: Evidence from the Survey of Consumer Finances,” Federal Reserve Board - Division of Research and Statistics, February 2009, available at http://www.federalreserve.gov/pubs/bulletin/2009/pdf/scf09.pdf.
2 Truth in Savings Act, 12 U.S.C.S. §4301(b).
3 Pew Health Group, “Hidden Risks: The Case for Safe and Transparent Checking Accounts” (April 2011)
4 A report detailing our 2011 data collection will be published this spring.
5 Pew Health Group, “Hidden Risks: The Case for Safe and Transparent Checking Accounts” (April 2011).
6 When we repeated this data collection in 2011 for the 12 largest banks and the 12 largest credit unions in the U.S, our data came to the same conclusion. Checking account disclosures are still very long and do not provide adequate means for consumers to understand their accounts or compare the terms of one financial institution with another.
7 Seventy-six percent of households earning less than $40,000 annually supported, as did 81 percent of those making between $40,000-$75,000, and 78 percent of households earning more than $75,000 indicated support. Eighty-one percent of accountholders age 18-34 support; 79 percent of accountholders age 35-49 support; Seventy-seven percent age 50-64 supported; and seventy-three percent age 65 and over supported. For more information on this survey, see http://www.pewtrusts.org/~/media/Post-Launc-Pre-NP/Consumer-Finance/Safe-Checking-Overdraft-Survey_REPORT.pdf.
8 See 12 C.F.R. §§1030.3, .4, .11.
9 Id.; See also 12 C.F.R. §1026.5.
10 Truth in Savings, Final Rule, 57 Fed. Reg. 43,337 (Sept. 21, 1992).
11 When Pew re-collected the data in October 2011, we found that this had not changed and was not limited to just banks, but credit unions as well.
12 When we collected data for the 12 largest banks and 12 largest credit unions in October 2011, we found that both groups used several different names for these terms.
13 The regulations should require that banks use only these terms when describing any overdraft “fees” or “plans.”