CFPB Expanding to Include Checking & Savings Account Complaints
Last week the new Consumer Financial Protection Bureau (CFPB) announced that it is now taking consumer complaints on deposit accounts. For those not aware of this bureau, it was founded as a result of the Dodd–Frank financial reform act, and it began operation on July, 2011. Its main focus has been on credit cards and loans, so it's nice to see it expanding to deposit accounts. Here's an excerpt of the CFPB announcement:
That is why I am so pleased to announce that today we are expanding our consumer response system to take consumer complaints on checking and savings accounts. By the end of the year, we will be taking consumer complaints on all consumer financial products and services. But adding deposit accounts is an important step for us.
Deposit accounts play a critical role in the lives of most Americans. We use our checking accounts and other bank services for cashing paychecks, paying monthly bills, making purchases, withdrawing funds, and managing our money. Many of us store our rainy day fund in a savings account. But checking and savings accounts — whether they are with a credit union, a thrift, or a bank — can also be a source of great frustration. We have heard story after story of consumers being hit with fees they did not expect and do not understand. We take these complaints very seriously.
I thought this may be a good opportunity to highlight the issue that we have seen in which credit unions have retroactively increased CD early withdrawal penalties (EWP). You can read about these cases in this blog post. The main issue at stake is the lack of transparency in the credit union disclosures. It's in no way obvious that CD holders should expect for the early withdrawal penalty to be increased before the CD matures. In my opinion, it clearly goes against the mission as described at CFPB's About Us page:
Above all, this means ensuring that consumers get the information they need to make the financial decisions they believe are best for themselves and their families—that prices are clear up front, that risks are visible, and that nothing is buried in fine print.
The main focus of CFPB appears to be checking accounts, but the announcement did mention deposit accounts. In addition, it asked readers to "reach out to us and tell us your story" at this CFPB form page. This isn't a complaint form, but according to this form instructions, "Your story will help inform how we work to protect consumers and create a fairer marketplace." I thought it would be useful to alert the CFPB to this CD early withdrawal penalty issue. So I submitted a description of this issue. If you are concerned with this issue, you might also want to use this form. The more of these stories provided, the more chance it will get attention.