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From the Editors of CU Weekly
AVOID OVERDRAFT COMPLIANCE HAZARDS
04/01/13 04:23 PM
JMFA: Tips to Streamline Processes
As credit unions gear up for the Consumer Financial Protection Bureau's (CFPB) final ruling on overdraft practices, JMFA, in partnership with Morrison Foerster LLP, conducted a study that looked into the benefits of overdraft programs to members, and also what credit unions can do to ensure their platforms are compliant.
Based on the results, JMFA has uncovered several immediate action steps credit unions can take to improve their overdraft services and procedures and avoid future regulatory action or fines. According to the study, it all comes down to educating and providing members with a clear and easy-to-understand overdraft program that should:
- Offer complete transparency and a detailed overview of the program, including implications.
- Implement reasonable overdraft fees that are thoroughly communicated to members.
- Provide clearly defined overdraft limits.
- Deliver transaction posting procedures that will not maximize member overdrafts and related fees created by the clearing order.
- Monitor excessive overdraft usage by members.
- Provide supporting materials that demonstrate alternative financial products to help excessive overdraft users.
In addition, JMFA recommends that credit unions provide members with simple explanations regarding opt-in and opt-out procedures, as well as incorporate outreach and guidance programs on money management issues like balancing a checkbook and budgeting.
For more information, visit www.jmfa.com.