One year later, guidance on overdraft fees results in 40% decline in charges, national bank regulator reveals

Overdraft fees charged by national banks, in aggregate, have dropped more than 40%, from $6.5 billion in 2021 to $4 billion in 2023, the agency’s leader said Thursday.

Speaking at a conference of the National Community Reinvestment Coalition (NCRC), Acting Comptroller of the Currency Michael Hsu said supervisory data continue to show declines in overdraft fees quarter over quarter.

“Among large banks, several have outperformed their peers in terms of reducing fees and adopting pro-consumer features, such as grace periods, while others have reduced overdraft fees only modestly,” Hsu said.

Hsu, who heads the Office of the Comptroller of the Currency (OCC) said his remarks were intended to mark the one-year anniversary of the OCC’s release of guidance on overdraft fees (which were released April 1, 2023).

“Importantly, all OCC-supervised large banks have stopped assessing authorize positive, settle negative fees or insufficient funds fees and most have discontinued collecting sustained overdraft fees,” Hsu said.

Regarding OCC-regulated midsize and community banks, Hsu said they have made or are in process of making various pro-consumer changes to their overdraft protection programs.

“For instance, most have eliminated representment fees or started offering de minimis grace amounts or grace periods,” Hsu said. “This includes those community banks that derive an outsized amount of revenue from overdrafts.”

However, Hsu noted that progress in representment has been “more challenging due to the critical role played by the core processors.”

“I have had the opportunity to share community bankers’ concerns on this issue with representatives of the core processors and encouraged them to continue to enhance their systems to facilitate transparency and pro-consumer practices,” Hsu said. “We understand the largest core processors are taking steps that will allow banks to identify and address representment practices. As those plans develop, we will continue to encourage banks and the core processors to take steps to protect and empower consumers.”

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