WASHINGTON—Acting Comptroller of the Currency Michael J. Hsu said the safety and soundness of the federal banking system continues to be a top agency priority, as is improving fairness in banking—including a focus on overdraft charges.
Speaking at a Washington meeting, Hsu pointed to several measures taken by the OCC to elevate and advance fairness, particularly for the underserved and financially vulnerable, JD Supra reported.
Stating that OCC examiners are encouraging bank management to review existing overdraft protection programs and consider adopting pro-consumer reforms, Hsu referred to October 2022 CFPB guidance aimed at addressing unfair, deceptive, and abusive practices associated with so-called “surprise overdraft” fees.
UDAAP Violations
Hsu noted the Federal Reserve Board and FDIC have cited the risk of violating UDAAP in connection with certain overdraft practices, stating not all overdraft practices are equal, stating that “authorize positive, settle negative” and “representment” fees both present heightened risks, JD Supra noted.
Recognizing the recent decline in banks’ reliance on overdraft fees, Hsu emphasized that most bankers he has spoken to “understand the importance of treating their customers fairly and have been open to learning about best practices.”
‘Committed to Being There’
He added, “[t]hese bankers are committed to being there for their customers and providing them with short-term, small dollar liquidity when it is needed most. Many customers tell their banks, as well as groups that have studied overdraft practices, that this banking service helps them meet payments when they come due.”
Hsu added that the OCC’s intended goal is to “improve the fairness of these programs by making them more pro-consumer, not to eliminate them,” and that “[m]ore fairness means more financially healthy communities, which means more trust in banking.”
Hsu also discussed efforts taken by the OCC to combat discriminatory lending practices, including working to enhance supervisory methods for identifying appraisal discrimination, JD Supra said.
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