On February 3, the Consumer Financial Protection Bureau announced that it is taking steps to help consumers get better access to checking accounts. The CFPB has “concerns that consumers are being sidelined by the lack of account options and by inaccurate information used to screen potential customers.” Towards that end, the CFPB sent letters to 25 of the largest banks and credit unions to encourage them to offer low risk checking accounts to their customers, to improve screening inaccuracies, and to provide account options to assist in avoiding overdraft fees. A copy of the letter can be found here.
The agency claims that although nine out of ten American households have at least one checking account, nearly ten million American households do not have a checking or savings account. As technology has improved and automated overdraft programs have been instituted, banks have placed greater emphasis on screening new applicants for accounts.
One manner in which banks screen applicants is to use information provided by checking account reporting companies, which have databases of information on involuntary closures of consumer checking accounts, supplied by banks and credit unions. In October 2014, the CFPB identified concerns about the information accuracy of these reports and consumers’ ability to dispute incorrect information. The CFPB believes many consumers are denied access to checking accounts because of inaccurate information used during this screening process. By improving reporting practices, it claims that more consumers will have access to the banking services they need.
“Consumers should not be sidelined out of the basic banking services they need because of the flaws and limitations in a murky system,” said CFPB Director Richard Cordray. “People deserve to have more options for access to lower-risk deposit accounts that can better fit their needs.”