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How Does Your Credit Union Rank When It Comes to Disclosure?
Thursday, March 1, 2018 6:50 AM

By Cheryl Lawson, Compliance Liaison, John M. Floyd & Associates (JMFA), EVP- Compliance Review, John M. Floyd & Associates (JMFA)

We hear a lot about rankings these days. Whether it’s the latest movie releases, professional and college sports teams, places to live, restaurants or online visibility, placing on the top rung of a ranking list can raise one’s reputational capital.

In the uber-competitive financial services space, achieving high consumer rankings greatly depends on an institution’s practice of consistently delivering excellent service experiences. This is especially relevant when it comes to products that address account holders’ financial stability needs. In a recently released study, "Consumer Voices on Overdraft Programs,” the Consumer Financial Protection Bureau interviewed consumers about their experiences with overdraft programs and their understanding of how these programs work.

Study participants identified an overdraft program as a resource for covering important expenses, such as medical bills, transportation costs, groceries, and utility bills, when they didn’t have the balance in their account to cover the amount. They credited such programs as a way to prevent late fees and negative credit reporting, as well as the embarrassment associated with having electronic payment attempts declined. However, respondents also pointed out that they are often unclear about the policies and procedures tied to their financial institution’s overdraft offering.

Take the guesswork out of your products to improve service quality and overall performance
To avoid member confusion, which can lead to damaged relationships and potential regulatory scrutiny, make sure your credit union maintains an ongoing, consistent focus on transparency for the products and services you offer. This includes incorporating updated communications strategies and management tools into your overdraft program to make it easier for everyone to understand how the program works, as well as how to use it responsibly. Key components of a fully disclosed program include:

  • Reasonable, communicated fees;
  • Clearly established overdraft limits;
  • Definitive explanations of regular and extended overdraft coverage;
  • Transparent transaction clearing policies that avoid maximizing member overdrafts and related fees created by the clearing order; and
  • Ongoing advice and information that explain alternative financial products that may more appropriately fit the needs of excessive overdraft users.

An expert in compliance and industry best practices can review your existing overdraft solution to ensure that you are in line with all regulatory expectations or help you implement a fully transparent program to improve your service quality. This includes comprehensive staff training to provide employees with the knowledge and confidence they need to fully explain your program; advanced analytics and robust data monitoring to support program management; and enhanced reporting and tracking capabilities to accurately measure program performance and identify any areas requiring improvements.

How does your overdraft solution rank in terms of compliance and service quality?
Sometimes people forget about a scheduled online payment or miscalculate the timing of a deposit to their account. Sometimes a temporary low balance or emergency situation makes the decision to knowingly overdraw a checking account the safest, least expensive option to ensure that important bills are paid. By implementing and maintaining a fully disclosed overdraft solution, you can provide members with a reliable safety net to get them through these situations.

On the other hand, if you are lacking fully disclosed overdraft policies and clear procedures, your institution is missing out on compliance piece of mind, as well as the opportunity to rank among the top providers of excellent member experiences in your market.

About the Author
Cheryl Lawson has more than 30 years of experience in global information technology and financial operations, as well as consulting, communications, training, and project management. She joined JMFA in 2001 and currently serves as the compliance liaison for the company’s overdraft privilege and other profitability programs. Cheryl is a sought-after authority for compliance issues related to overdraft programs. She continues to be invited to speak at numerous industry events.

Prior to joining JMFA, Cheryl was managing consultant for DA Consulting Group, Inc., in Chicago and Houston, where she was credited with saving the firm some $10 million through high-efficiency technology strategies. Previous positions include IBM systems engineer, international MIS trainer for Chase Manhattan, director of communications for Bankers Trust Company of New York, and CEO of a start-up providing nonprofit organizations with automation solutions. The Houston native earned her bachelor’s degree in English from Carnegie-Mellon University, followed by an MBA from Rice University.

About John M. Floyd & Associates (JMFA)
For the past 38 years, JMFA has been considered one of the most trusted names in the industry helping community banks and credit unions improve their performance and profitability. Whether it’s recovering lost revenue, uncovering savings opportunities, serving your account holders better, finding the perfect personnel fit or delivering a 100 percent compliant courtesy pay program, JMFA has the right solutions to help you not only meet but exceed your goals. We are proud to be a preferred provider among many industry groups, including CUNA Strategic Services. To learn more please visit or call 800-809-2307.

JMFA is an endorsed business partner of Credit Union Resources, Inc., a wholly owned subsidiary of the Cornerstone Credit Union League.