The outlook for automated overdrafts seems bright

Now that the election is over, there is much speculation about how a Trump presidency will impact our industry. Most everything we read is positive, especially about the future of automated overdraft programs. In particular, we are encouraged by:

• Recent news articles regarding the future role of the CFPB and
• Trump’s statements about reducing banking regulations

Additionally, a recent Federal Reserve-sponsored webinar suggested the regulatory bodies are not looking for a major overhaul in overdraft programs, but instead are focusing on the inner workings of an overdraft program. The presenters focused on manageable details like:

• Overdraft processing logic must match account disclosures.
• Marketing materials must include potential costs (including overdraft service costs), not just benefits and features.
• Institutions must adhere to all Reg E Opt-in regulations before assessing a fee on ATM and one-time debit card transactions.
• Balance calculation methods must be properly disclosed.

Indeed these positive signals should encourage you that the future of overdraft programs is bright, especially if you were anticipating a punitive or restrictive CFPB decision.

The regulatory bodies that participated in the aforementioned webinar also clearly stated that even credit unions with an ad hoc overdraft program will need to “play by the rules” and may even need to enlist the help of outside experts in order to effectively do so.

Now is the time to move forward with implementing an automated overdraft program, so that you can reap the income and service benefits early in 2017.

To download BSG Financial Group’s Compliance Alert that outlines all of the topics discussed in the webinar, go to http://info.bsgfinancial.com/bsg-financial-compliance-alert-interagency-overdraft-discussion.

Here you may also download the webinar slides, view the presentation and submit overdraft-related questions to us.