Proposed Templates for Safe, Low-Cost Transactional and Basic Savings Accounts
On April 1, 2010, the FDIC Advisory Committee on Economic Inclusion (Committee) discussed draft templates for safe, low-cost transactional and savings accounts. The templates were designed for underserved LMI consumers as a way to increase the supply of products tailored to the needs of these consumers. The Committee recommended that the FDIC solicit public comments on the draft templates, and the FDIC published the templates for comment on May 7, 2010, with a June 6, 2010 deadline. Forty-seven comments were received. The comments are available at http://www.fdic.gov/consumers/template/comments.html. The templates were finalized on June 24, 2010.
Draft Transactional and Basic Savings Account Templates
The draft transactional and basic savings account templates included product features and fees that closely reflected the needs of underserved LMI consumers. These financial services products are FDIC-insured and covered under the Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.) and its implementing regulation, Regulation E (12 C.F.R. part 205), and other applicable consumer protection laws, regulations, and guidance.
The proposed draft transactional account template was an insured transactional account that was structured as a low-fee, basic checking account or an insured account-based debit card. The transactional account template featured low opening and monthly minimum balance requirements and low maintenance/service fees. The template also featured electronic banking (i.e., phone, online, or mobile banking) options and, in order to minimize unexpected fees, overdrafts were not permitted. Direct deposit was encouraged (but not required) for such accounts. Also, ancillary transactional services (money orders, check cashing, bill paying, and wire transfers) were to be available for a competitive fee relative to fees charged for comparable services provided by non-banks in the bank’s market area. Institutions could consider providing customers with blemished histories in managing previously held accounts an opportunity to open a "second chance" account, where appropriate. The proposed draft savings account template was also an insured account that emphasized low barriers for opening and maintaining the account.
The FDIC sought comments on all aspects of the templates, including:
What are the expected benefits to consumers using safe, low-cost transactional and basic savings accounts?
If check-writing is permitted, should there be a maximum number of checks that can be written each statement cycle? If so, at least how many checks should be allowed to be written each statement cycle?
What is an appropriate range for "low fees" necessary to offset some of the financial institution’s costs associated with offering a transactional account?
What constitutes a reasonable range of competitive fees for other financial services (e.g., money orders, check cashing, bill payment, domestic and international wire transfers, and other financial services) offered to customers and noncustomers?
What are some ways of minimizing the costs of offering transactional and savings accounts with attractive features for LMI underserved consumers?
Are there types of transactional accounts other than basic checking, basic savings accounts, and account-based debit cards that would be attractive to both LMI underserved consumers and insured financial institutions?
The FDIC received comments from banks, other financial institutions, state and federal banking agencies, financial industry trade groups, and private citizens by the deadline on June 6, 2010. All comments received were posted generally without change to http://www.fdic.gov/consumers/template/comments.html.
The majority of commenters stated that consumers would benefit from having safe, low-cost transactional and savings accounts. Many also discussed the role of technology in the design of the template. In particular, a number of commenters expressly suggested that the transactional accounts be checkless and both types of accounts be predominantly electronic-based to lower costs. The FDIC Model Safe Accounts Template emerged from consideration of public comments, additional suggestions from the Committee, and review by the FDIC's Board of Directors.
The FDIC Model Safe Accounts Template
After considering the comments received, FDIC staff revised and combined the templates and presented the results at the ComE-IN meeting on June 24, 2010. The comments helped inform the Committee about which features and corresponding fees could be included in sustainable and safe, low-cost accounts for LMI underserved consumers. The Committee discussed whether the FDIC could further revise the template to differentiate between core product features and auxiliary services and whether the FDIC would be interested in launching a pilot to test the sustainability of the accounts.
The FDIC Model Safe Accounts Template is a roadmap for accounts that would be available to all consumers, but that would be particularly responsive to the needs of underserved and LMI consumers. A description of prominent account features is below.
The accounts are largely electronic, limiting acquisition and maintenance costs as much as possible.
The accounts are FDIC-insured, have reasonable rates and fees that are proportional to their cost, and are subject to applicable consumer protection laws, regulations, and guidance.
The transactional accounts are "checkless" allowing withdrawals only through automated teller machines, point-of-sale terminals, automated clearing house preauthorizations, and other automated means.
There are no overdraft or non-sufficient fund fees for these checkless accounts.
Savings accounts have "autosave" features such as preauthorized periodic electronic transfers from other accounts.
Where permitted by applicable laws and regulations, and after obtaining a consumer's consent, both types of accounts may feature electronic statements in lieu of paper.
Standard customer identification rules will apply, including verification through the use of a variety of well-established, permissible forms of identification (see 31 C.F.R. § 103.121).
The FDIC Board of Directors approved a pilot to evaluate the feasibility of the FDIC Model Safe Accounts Template on August 10, 2010. The FDIC accepted applications from August 10, 2010 through October 15, 2010 and announced the selection of nine pilot banks on November 16, 2010. The ultimate goal of the pilot is to encourage insured institutions to offer safe, low-cost accounts that have been proven to be both beneficial to consumers and sustainable for insured institutions. More information on the pilot is available at http://www.fdic.gov/consumers/template/.