OCC’s Hsu keeps up pressure on overdraft programs, urging banks to pursue ‘pro-consumer’ changes

Banks should pursue “pro-consumer” changes to their overdraft programs, the acting comptroller of the currency wrote in an article appearing Monday in a trade journal, reiterating a warning he issued to banks earlier this month.

According to the American Bankers Association (ABA), a column written by Acting Comptroller Michael Hsu and published in the American Banker newspaper (a trade publication not associated with the ABA), called on banks to “resist limiting the extent of their reforms (of their overdraft programs) by taking a profit-oriented approach and reverse engineering costs to meet predetermined revenue targets.”

He wrote that banks should use data to identify the reforms that help customers the most. He said that includes “grace periods that give customers time to cover overdrafts and avoid fees, grace amounts that allow customers to overdraft by certain amounts without a fee, and changes in posting order, i.e., the sequence in which payments are made, to limit repeat fees.”

He also wrote, the trade group said, that banks should take a similar approach when developing small-dollar lending capabilities and considering new products.

The acting comptroller also noted, the association said, several changes large and midsize banks have announced to their programs recently. “Banks that hesitate to adopt pro-consumer overdraft programs will soon be negative outliers,” Hsu wrote, the trade group said.

Hsu Repeats Overdraft Warning in American Banker Op-Ed