- Senators Continue to Push for Simplified Checking Account Disclosures
- January 10, 2012 | Author: Jeffrey T. Powell
- Law Firm: Jones, Walker, Waechter, Poitevent, Carrère & Denègre L.L.P. - Birmingham Office
This year banks will likely continue to feel pressure to simplify their products and make disclosures more consumer-friendly. Among other products, consumer advocates have begun to focus on disclosures related to consumer checking accounts.
In April 2011, the Pew Charitable Trusts released a report titled Hidden Risks: The Case for Safe and Transparent Checking Accounts. The report, which studied checking account terms and conditions at the 10 largest banks in the United States, stated that account disclosures at large banks average 111 pages, and information on fees and penalties are typically contained in fine print. The Pew Group went on to suggest ways to make such disclosures more concise and recommended an easy-to-read one-page consumer checking account disclosure. The Pew disclosure lists certain checking account terms and conditions, including interest rates, ATM fees, overdraft fees, posting order, dispute resolution provisions, and account closing fees.
Beginning in November 2011, certain lawmakers, including Sen. Dick Durbin (D-Ill.) and Sen. Jack Reed (D-R.I.), urged all banks to adopt the Pew disclosure voluntarily. The Senators also called for the Consumer Financial Protection Bureau (“CFPB”) to move quickly to require all banks and credit unions to post the one-page disclosure on their websites.
Recently, Chase and two of the country’s three largest credit unions-the Pentagon Federal Credit Union and the North Carolina State Employees’ Credit Union-adopted some version of the Pew disclosure. Chase has created a three-page online disclosure for its “Chase Total Checking” account. Notably, the disclosure incorporates Chase’s Deposit Account Agreement by reference to include the complete terms and conditions for the account.
Senators Durbin and Reed, along with Sen. Chuck Schumer (D-N.Y.), applauded these financial institutions’ adoption of the simplified disclosure and vowed to push for more regulatory reform. Raj Date, the acting head of the CFPB, has indicated that the CFPB will attempt to create more transparency regarding checking account fees, but has yet to say whether he would push for a rule that adopts the Pew disclosure.
It is not clear if the Pew disclosures will be adopted voluntarily by the industry or if the CFPB will move towards a more simplified disclosure. We will continue to monitor the CFPB and any action by Congress toward mandating adoption of uniform disclosures for checking accounts.