Dec 1, Reuters - The U.S. Consumer Financial Protection Bureau CFPB will issue new guidance on curbing banks' reliance on fees from overdraft and non-sufficient funds NSF facilities that lenders impose on consumers, its top official said on Wednesday.
Rohit Chopra said that he has also tasked the regulators with prioritizing banks that over-rely on such fees, of which banks netted $69 billion in the third quarter.
The agency hopes that data-sharing rules changes that are intended to boost competition among lenders will make it easier for consumers to dump banks that overcharge them.
The consumer watchdog is considering a range of regulatory interventions to restore meaningful competition in this part of the checking market, rather than allowing large institutions to rely on overdraft and non-sufficient revenue fees forever, according to Chopra.
Chopra pointed out that a blockbuster third quarter far surpasses the $15 billion netted in 2019.
On Wednesday, Capital One Financial said it would eliminate all overdraft and NSF fees for consumers, ending a practice that drew the ire of U.S. lawmakers at a Senate hearing earlier this year.
In a memo, Chief Executive Officer Richard Fairbank said customers will have to show a pattern of steady deposits in order to be eligible for the free overdraft protection service.
The CFPB is not holding out hope that this will happen quickly, as many in the market are anticipating that other large banks will also call it quits on overdraft fees.
Industry groups criticized the move by the CFPB to introduce stifling rules that could hurt competition and innovation that may benefit American consumers.
Richard Hunt, who leads the Washington-based Consumer Bankers Association, said there are few options for consumers to meet their short-term liquidity needs outside the well-regulated, well-supervised banking system.