Senators want banks to simplify checking account fee disclosures
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Emboldened by Bank of America’s decision to abandon a proposed $5 monthly debit card fee, two senators on Thursday asked regulators to require banks to provide customers with a simple, one-page form listing all their checking account fees.
The goal is to give consumers a standardized, easy-to-understand disclosure form to make it easier to compare fees charged by banks.
‘When consumers are informed and can make choices, that’s when the free market is at its best and strongest,’ said Sen. Dick Durbin (D-Ill.), who was joined by Sen. Jack Reed (D-R.I.) at a Capitol Hill news conference.
The two want banks to voluntarily adopt such a disclosure. But they also wrote to Raj Date, the acting head of the new Consumer Financial Protection Bureau, requesting that the agency act quickly to require banks and credit unions to post such a disclosure form on their websites.
Durbin and Reed touted a one-page disclosure form proposed by the Pew Charitable Trust. The form lists all basic checking account terms and conditions, including interest rate, ATM fees, overdraft penalties and account closing fees.
Susan Weinstock, director of the project, said the form was developed after analyzing 250 types of checking accounts last year.
‘A hundred and eleven pages -- that’s the median length of disclosure documents from the 10 largest banks in the United States,’ she said at the news conference. ‘These documents are not user-friendly, with highly technical and dense text.’
Pew tested its form with consumers in Los Angeles, Philadelphia and Minneapolis. Two of the nation’s three largest credit unions -- the Pentagon Federal Credit Union and the North Carolina State Employees’ Credit Union -- have agreed to use the form to post fees on their websites, she said.
Durbin led the fight to enact new limits on the fees that banks charge to retailers to process debit card payments. BofA proposed its monthly debit card fee to offset money it expects to lose because of the limit, which took effect Oct. 1. Some other large banks were testing a fee as well.
Strong consumer backlash led the banks to abandon those plans. BofA, which triggered much of the ire, announced its decision Tuesday.
Durbin, who had urged BofA customers to switch to other banks, said a simple checking account disclosure was the logical next step to empower consumers after they beat back the debit card fees.
Date, of the CFPB, said the agency would push in the coming months for more transparency on checking account fees.
‘A checking account is a critical, valuable product for millions of Americans,’ he said Thursday. ‘But checking accounts and debit cards often come with unexpected costs and fees that can quickly add up. With upfront and easy-to-understand information, consumers can comparison shop for the best deal for them.’
Date did not indicate whether he would push for a rule, which could take up to two years to enact, or seek a voluntary agreement by banks to adopt a simpler disclosure.
Richard Hunt, president of the Consumer Bankers Assn., said his members ‘support clear and easy to understand disclosures’ and would work with the CFPB, as they have been doing recently on a new simplified mortgage disclosure form.
BofA cancels plans for $5 a month debit-card fee
Chase opts out of debit-card fee
BofA debit card fee prompts animosity from coast to coast
-- Jim Puzzanghera in Washington