Importance of an Overdraft Privilege Service Policy
Consumers should be provided an Overdraft Privilege Service Policy which discloses the limit, fees, and general practices before any limit is assigned, in addition to the standard deposit agreement and fee schedule. The Service Policy needs to be provided at program launch, new account opening or when a consumer account qualifies for Overdraft Privilege.
Disclosing your Overdraft Privilege Program clearly to the consumer in a Service Policy is a key element to any Overdraft Privilege Program. Having an Overdraft Privilege Service Policy is important from a compliance perspective and it will also help improve the program’s performance because consumers will be more familiar with the features and limits.
Most financial institutions that have an Overdraft Privilege program either don’t have a Service Policy or they have a Service Policy that is not consistent with their other disclosures. It is always important to be consistent with terminology regarding your program because these are sensitive points with regulators who fear use of different terminology could be confusing/deceptive for the consumer.
Strunk has a standard Overdraft Privilege Service Policy that we offer to our clients and is backed by our compliance guarantee. Policies should be reviewed and approved by the Board of Directors annually, and as a Strunk Access client, your institution is entitled to assistance in ensuring your policy complies with any regulatory changes that may have occurred during any given year. Strunk believes it is always better to voluntarily describe the specific benefits, features and limitations of products and services; and to tell consumers what the rules are.
