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Highlights

In 2006, consumers paid over $36 billion in fees associated with checking and savings accounts, raising questions about consumers' awareness of their accounts' terms and conditions. GAO was asked to review (1) trends in the types and amounts of checking and deposit account fees since 2000, (2) how federal banking regulators address such fees in their oversight of depository institutions, and (3) the extent that consumers are able to obtain account terms and conditions and disclosures of fees upon request prior to opening an account. GAO analyzed fee data from private data vendors, publicly available financial data, and information from federal regulators; reviewed federal laws and regulations; and used direct observation techniques at depository institutions nationwide.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
National Credit Union Administration 1. To help ensure that consumers can make meaningful comparisons between depository institutions--the Chairman, Federal Deposit Insurance Corporation; Chairman, Board of Governors of the Federal Reserve System; Chairman, National Credit Union Administration; Comptroller of the Currency, Office of the Comptroller of the Currency; and Director, Office of Thrift Supervision should assess the extent to which consumers receive specific disclosure documents on fees and account terms and conditions associated with demand and deposit accounts prior to opening an account, and incorporate steps as needed into their oversight of institutions' compliance with TISA to assure that disclosures continue to be made available.
Closed - Implemented
NCUA stated that in response to GAO's recommendation, the Federal Financial Institutions Examination Council Task Force (FFIEC) on Compliance revised its Regulation DD-Truth in Savings Act (TISA)--examination procedures in June 2008. An updated version of NCUA's TISA examination guidance that reflected the FFIEC revised procedures was released July 2009. Additionally, NCUA stated it released a Regulatory Alert to credit unions, in August 2010. NCUA revised its Rules and Regulations Part 707, TISA, consistent with the requirements of Regulation DD, 12 CFR 230, including changes effective January 1, 2010, concerning disclosures of aggregate overdraft and returned fee items. After updating the regulation, NCUA likewise updated the applicable questionnaire. According to NCUA, it has updated the TISA questionnaire. For example, NCUA provided an updated TISA questionnaire used in all examination procedures starting after June 30, 2012 and confirmed that examiners are using the new procedures and questionnaire, as of June 30, 2012.
Federal Reserve System 2. To help ensure that consumers can make meaningful comparisons between depository institutions--the Chairman, Federal Deposit Insurance Corporation; Chairman, Board of Governors of the Federal Reserve System; Chairman, National Credit Union Administration; Comptroller of the Currency, Office of the Comptroller of the Currency; and Director, Office of Thrift Supervision should assess the extent to which consumers receive specific disclosure documents on fees and account terms and conditions associated with demand and deposit accounts prior to opening an account, and incorporate steps as needed into their oversight of institutions' compliance with TISA to assure that disclosures continue to be made available.
Closed - Implemented
On July 28, 2009, the Federal Reserve Board (FRB) issued a letter to each of the Federal Reserve Banks notifying them of updated interagency examination procedures for Regulation DD (Truth in Savings) that incorporated changes made in response to GAO's recommendation. The Regulation DD examination procedures were updated to emphasize the existing requirement to provide full account disclosure (fees, terms, conditions, etc.) to a consumer upon request, whether or not the consumer is an existing or prospective customer. The revisions to the examination procedures also focus on the need for examiners to make sure that supervised institutions train appropriate employees on the disclosure requirements of Regulation DD. FRB noted that the Federal Reserve Banks were asked to distribute a copy of the July 28, 2008, letter and the accompanying revised examination procedures to banking organizations supervised by the Federal Reserve in their districts, as well as to its supervisory and examination staff.
Federal Deposit Insurance Corporation 3. To help ensure that consumers can make meaningful comparisons between depository institutions--the Chairman, Federal Deposit Insurance Corporation; Chairman, Board of Governors of the Federal Reserve System; Chairman, National Credit Union Administration; Comptroller of the Currency, Office of the Comptroller of the Currency; and Director, Office of Thrift Supervision should assess the extent to which consumers receive specific disclosure documents on fees and account terms and conditions associated with demand and deposit accounts prior to opening an account, and incorporate steps as needed into their oversight of institutions' compliance with TISA to assure that disclosures continue to be made available.
Closed - Implemented
On October 31, 2008, FDIC issued a memorandum to its regional directors that stated: "When examining for compliance with Regulation DD and Regulation E, examiners should carefully evaluate not only an institution's written policies, procedures, and disclosure information, but also how readily disclosure information is available to the public. Examiners also should review the results of any internal or external audit of this information, especially as performed during branch visits, and the regularity with which these disclosures are reviewed by management." The memorandum stated that its provisions became effective immediately. The regional directors were instructed to distribute the memorandum to all compliance staff engaged in the examination or examination support process.
Office of the Comptroller of the Currency 4. To help ensure that consumers can make meaningful comparisons between depository institutions--the Chairman, Federal Deposit Insurance Corporation; Chairman, Board of Governors of the Federal Reserve System; Chairman, National Credit Union Administration; Comptroller of the Currency, Office of the Comptroller of the Currency; and Director, Office of Thrift Supervision should assess the extent to which consumers receive specific disclosure documents on fees and account terms and conditions associated with demand and deposit accounts prior to opening an account, and incorporate steps as needed into their oversight of institutions' compliance with TISA to assure that disclosures continue to be made available.
Closed - Implemented
Working with the other members of the Federal Financial Institutions Examination Council (FFIEC), OCC and the regulators completed revisions to the examination procedures for Regulation DD, which implements the Truth in Savings Act. OCC issued revised examination procedures based upon the FFIEC revisions on November 2008 (see Comptrollers Handbook: Depository Services). The revised examination procedures specifically state; "A depository institution must provide full account disclosures, including complete fee schedules, to a consumer upon request. This requirement pertains to all consumer requests, whether or not the consumer is an existing customer or a prospective customer." The handbook notes that institutions are required to disclose the amount of any fee that may be imposed in connection with the account (or an explanation of how the fee will be determined) and the conditions under which the fee may be imposed. To determine the bank's compliance with the Truth in Savings Act, OCC's examination procedures state that, among other things, the examiner is to "Determine that account disclosure information is provided to new or potential deposit account customers within the appropriate time frames."
Office of Thrift Supervision 5. To help ensure that consumers can make meaningful comparisons between depository institutions--the Chairman, Federal Deposit Insurance Corporation; Chairman, Board of Governors of the Federal Reserve System; Chairman, National Credit Union Administration; Comptroller of the Currency, Office of the Comptroller of the Currency; and Director, Office of Thrift Supervision should assess the extent to which consumers receive specific disclosure documents on fees and account terms and conditions associated with demand and deposit accounts prior to opening an account, and incorporate steps as needed into their oversight of institutions' compliance with TISA to assure that disclosures continue to be made available.
Closed - Implemented
On April 2, 2009, the Office of Thrift Supervision (OTS) issued a regulatory bulletin to its examination staff transmitting revised examination handbook section dealing with assessing regulated institution's compliance with the Truth in Savings Act. The bulletin specifically stated that the changes made to its examination procedures include "Incorporation of steps into the oversight of institutions? compliance with TISA to ensure that consumers receive appropriate disclosures for fees and account terms associated with deposit ac-counts. This change responds to recommendation by the Government Accountability Office (GAO) to the federal financial regulatory agencies." The bulletin noted that under the revised examination procedures that regulated institutions should ensure that consumers receive appropriate disclosures for fees and account terms and conditions associated with deposit accounts prior to opening an account regardless of whether they are existing or prospective customers. The bulletin further noted that the examination procedures were developed on an interagency basis.

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