We’re happy to provide our fifth article in a series for CreditUnions.com. It’s been a privilege to provide helpful online articles on a subject we feel we know a little bit about – Overdraft Payment Services. Last month we discussed an ODP Checklist, which highlights a simple step-by-step list of things to consider when implementing an overdraft program. This month we’ll be discussing the issue of disclosure. Proper disclosure is imperative for implementing an overdraft service that is appropriate for your members and compliant with the rules and regulations governing these services. Plus, it’s just common sense that any service you provide to your members should be clearly defined and communicated.
Disclosure is normally a process or procedure credit unions extend to their members on a voluntary and proactive basis. For regulators, however, it has become an expectation or requirement that is routinely referenced in all documentation to satisfy concerns for consumer protection. Those that develop or offer financial service products – particularly those that are new, innovative or defined as “non-traditional” – should expect strong disclosure requirements to be the standard in the future.
We read about disclosure in trade journal articles, read about it in regulatory documents and hear it in speeches. In a talk given by a senior executive of one of the federal regulatory agencies recently, disclosure was discussed relative to “non-traditional” mortgages. The talk contained important disclosure messages that were strikingly similar to verbiage applied to overdraft payment services.
Non-traditional mortgages appear to be following the same regulatory path as ODP services. Guidance governing these products has not been finalized, but the proposed guidance is very similar to that governing overdraft programs. Areas of disclosure that are covered include proper communications with consumers, informative and factual promotional materials and descriptions, complete monthly statements, and the avoidance of any practices that might obscure information and mislead the consumer. Sound familiar?
Second, it’s not enough to just implement disclosure policies. Disclosures must work. You can prepare, communicate – disclose – all the information you want on an overdraft payment service, but if your members don’t listen, read or understand the message, your efforts are in vain. Your primary objective must be to ensure that disclosures are clear, timely and to the point; otherwise consumers will not have the means to make informed decisions.
It is important to bring about clearer and more understandable disclosure of financial products like overdraft payment services. Credit union managers and employees should communicate the overdraft service program’s features, costs and limitations to all participating members. Work with someone you trust and make sure they can help your credit union prepare materials on your overdraft payment service that are clearly written and understandable to your members.
Strunk & Associates is very proud to have put consumer disclosure and information regarding overdraft payment service at the top of our priority list. Credit union clients who have adopted the Strunk & Associates, L.P. Overdraft Privilege SM Service Program will attest that we provide disclosure materials that go above and beyond regulatory requirements. Since October 1 st, the regulatory landscape makes disclosure even more crucial. If you’d like more information about our product offerings, call us at 1-800-728-3116, email us at email@example.com or go to our website at www.strunklp.com.
In business since 1976, Strunk & Associates, LP is a financial advisory service recognized nationally for its innovative design, development and implementation of The Original “Overdraft Privilege Service Program”. Strunk & Associates, LP currently has over 1250 verifiable Overdraft Privilege Service clients throughout the United States and the Caribbean.
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