The Independent Community Bankers of America (ICBA) on Thursday urged caution regarding the Consumer Financial Protection Bureau’s (CFPB) new rule on prepaid accounts.
The final rule includes new regulatory requirements and disclosure forms for prepaid accounts and adds mandates on deposit accounts and overdraft service. ICBA said the new rule would limit consumer choice and inhibit access to certain financial products.
“The added regulatory burdens forced on community banks by the CFPB’s final rule will ultimately harm the consumers the rule is supposed to help,” Camden R. Fine, president and chief executive officer of ICBA, said. “ICBA will continue working with the CFPB to contain the damage of this new regulation.”
In Mar. 2015, the ICBA issued a letter publicly opposing any Regulation Z coverage for overdraft services for prepaid accounts. Regulation Z is a financial rule that prohibits certain payments made to compensate loan originators and was originally implemented to protect mortgage consumers from unfair payments. Additionally, ICBA urged the CFPB not to finalize any new overdraft requirements for prepaid accounts outside of the current requirements.
ICBA said the organization will continue to work with the CFPB and community banks in implementing the final rule to minimize any negative outcomes on existing community bank customers.