ABA, SBAs: CFPB RFI shows ‘deeply flawed conclusions’ on consumer financial markets  

The American Bankers Association and all 51 state bankers associations today directly challenged the CFPB on a recent request for information regarding fees associated with financial products and services offered by banks and non-bank financial institutions, including overdraft fees, insufficient funds fees, credit card fees, remittance fees, prepaid account fees and mortgage fees, among others.

“[T]he RFI makes clear that the bureau has already drawn a series of deeply flawed conclusions regarding the market for consumer financial services and the use of fees in the market,” the associations said in a joint comment letter. “An RFI that asks for ‘stories’ about fees that ‘you believed were covered by the baseline price’ or ‘unexpected’ or ‘seemed too high for the purported service,’ and closes by asking how the bureau should ‘address the escalation of excessive fees’ is not a search for the facts, but instead is a solution in search of a problem.”

The groups offered fact-based evidence emphasizing that the market for consumer financial services is “fiercely competitive,” and that as required by laws and regulations that the CFPB itself administers, fees are clearly and conspicuously disclosed to consumers in multiple ways. “Available evidence, including the bureau’s own testing and reports, show that consumers understand these disclosures, and appreciate the products and services provided even if they have to pay fees for them,” they wrote.

Finally, the associations urged the CFPB to “not substitute its own judgment for the sound decisions of consumers who choose to use valuable services offered by financial institutions,” and cautioned that while [the CFPB]has broad authority to initiate a rulemaking to improve disclosures, the bureau has very limited authority to restrict fees substantively, and doing so would reduce consumer choice and access to products and services.” ABA raised similar concerns in a joint letter with several other financial associations today.

ABA President and CEO Rob Nichols doubled down on the associations’ message in a statement shortly after the comment letters were filed. “Surveys show that consumers recognize the value they get from the wide array of banking services available to them today,” Nichols said. “Anyone unsatisfied with the terms of a financial product, which must be clearly disclosed under existing CFPB rules, has thousands of other options in today’s highly competitive marketplace. Our comment letter sets the record straight and makes clear that the bureau’s misguided campaign against fictional ‘junk fees’ is unfortunately an attempt at ‘junk’ regulating without any supporting facts.”

ABA recently released data from a Morning Consult poll that found that a majority of consumers—83%—believe that their bank is transparent about disclosing fees, and that 62% believe that fees charged by their bank are reasonable. Consumers also overwhelmingly agreed that overdraft specifically was valuable (89% said they valued the service), and 61% believe that charging for this service is reasonable.