On October 8, Consumer Financial Protection Bureau Director Richard Cordray delivered prepared remarks on screening policies and practices associated with the opening of checking accounts. These remarks, which focused on the specialty credit reports used by banking institutions to determine a potential customer’s credit risk, may signal the CFPB’s increased interest in access to checking accounts.
According to Cordray’s remarks, the CFPB believes that banking institutions often utilize specialty credit reports when deciding whether to allow a consumer to open a checking account. These reports focus on topics such as a consumer’s previous checking account closures, check writing activities, and checking account history. Banking institutions use these reports to determine whether a consumer is a credit risk.
The CFPB is concerned with weaknesses in the process by which banking institutions assess a consumer’s suitability for a checking account. According to Cordray, the CFPB is concerned about the accuracy of these specialty reports, a consumer’s ability to dispute any inaccurate information, and the ways in which these reports are being used. Because of these concerns, the CFPB is looking to improve several aspects of the industry, including improving the accuracy of these reports, improving the fidelity of the data reported to banking institutions, enhancing the ways in which consumers can obtain information regarding their reports, and ensuring that consumers are not unnecessarily denied checking accounts based on these specialty reports.
Although it is unclear from Cordray’s remarks whether the CFPB intends to take imminent action with respect to access to checking accounts, the fact that this topic is on the CFPB’s radar should draw the attention of banks, credit unions, and specialty credit reporting agencies.