Washington, D.C. – The Bank Policy Institute responded today to the Consumer Financial Protection Bureau’s review of fees charged by financial institutions. The Bureau is seeking information on fees related to deposit accounts, credit cards, remittances and payments, prepaid accounts, mortgages and other loans, but relies on four critical misconceptions as the basis for its review. BPI refutes these misconceptions in its response and highlights the many laws and regulations already in place to protect and inform consumers and foster competition.
What is BPI Saying: Greg Baer, BPI President and CEO, issued the following statement:
Banks compete aggressively for consumers’ business, and any fees they charge are disclosed consistent with a regime mandated by Congress and administered by the CFPB. The Bureau’s RFI cites no data and provides no empirical analysis to support its overwrought assertions about “junk” or “surprise” bank fees, and remarkably fails to acknowledge that those fees are fully disclosed under a regime that the Bureau administers. Nor does the RFI seek meaningful input from commenters or suggestions on how to improve its regulations, preferring instead simply to solicit complaints.
What the CFPB Got Wrong:
The Request for Information issued by the Bureau:
- Assumes fees are not transparently disclosed to consumers in advance. Banks are broadly required by various congressional mandates and agency regulations, many of which are directly administered by the CFPB, to provide customers with detailed disclosures for virtually all consumer financial products and services, up-front, including about fees charged.
- Charges that the financial services industry is non-competitive. The already competitive banking industry has seen a significant increase in competition from online banks, FinTechs and other consumer financial product and service providers. Recent research demonstrates that the U.S. banking industry is much less concentrated than other industries that serve U.S. households. Further, the vast framework requiring disclosure of virtually all fees further promotes competition for banking products and services.
- Fails to acknowledge the benefits of financial products and services for consumers. Consumers enjoy 24-hour-a-day access to payment services and FDIC insurance of up to $250,000 on checking and savings accounts. They also benefit from protection against fraudulent charges, assistance with merchant disputes, access to reward programs, and interest-free loans on credit card products when balances are fully repaid every month. Many of these products come with features such as branch access, online banking capabilities and other innovations with an underlying cost to banks that consumers are generally provided without a fee.
- Inaccurately asserts that most revenue earned by banks is from fees. Banks generate most earnings from net interest income — earnings obtained from the fundamental banking function of funding loans through deposits.
The Bureau issued its Request for Information in January 2022. In the Request, the Bureau sought to outline several broad examples of what it incorrectly characterizes as “junk fees” while also likening these fees to those found outside of the banking industry, such as resort fees and concert ticket fees. BPI issued a public statement in collaboration with a broad coalition of trade associations representing both banks and credit unions following the initial announcement.
Comments were originally due on March 31; however, the Bureau announced an extension until April 11, 2022.
Go Deeper: To access a copy of BPI’s response, please click here.
About Bank Policy Institute.
The Bank Policy Institute (BPI) is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost 2 million Americans, make nearly half of the nation’s small business loans, and are an engine for financial innovation and economic growth.