ABA Urges FDIC to Rescind Guidance on Deposit Advance Services

In a letter to the FDIC today, the American Bankers Association called on the agency to rescind its 2013 guidance on direct deposit advance services. The guidance established prescriptive supervisory expectations for underwriting, credit risk monitoring and limits on customer usage that caused almost all banks to discontinue those services.

ABA’s request came on the heels of last week’s announcement by the OCC rescinding similar guidance to avoid subjecting OCC-regulated banks to underwriting requirements and cooling-off periods that are inconsistent with the requirements in the CFPB’s final small-dollar lending rule, which was also released last week. The association pointed out that the FDIC’s guidance imposes similar requirements, and is therefore inconsistent with the CFPB’s final rule.

“Banks are eager to innovate and expand their offerings of small dollar credit products,” ABA wrote. “We urge you to facilitate the establishment of bank programs that offer fair, convenient, and sustainable small dollar loans to customers.”