Banks need to do better at providing consumer protections and disclosures for their checking account holders, a study by Pew Charitable Trusts released last Friday said. The study examined the checking account offerings of the top 50 U.S. banks by deposits in three areas: disclosures of costs and terms, reduction in the number of overdraft fees charged and processes for resolving a customer’s problem with their account.
The study, “Checks and Balances: Measuring Checking Accounts’ Safety and Transparency, found that several of the banks in the study had implemented best practices in one or two of these areas, but none of them had done so across all three areas.
About 97% of the banks in the study has implemented at least one best practice. But, the study noted, there is still much room for improvement in the industry; 14 of the banks in the study did not even provide customers with disclosure of terms and fees for their account by mail or online. Customers of those banks could only get that account information by going to the branch, according to the study.
Ally Bank had implemented the most best practices, the study said, and received the highest score in the study. Charles Schwab Bank, First Republic Bank, Citibank and Bank of America rounded out the top five.
In the study, Pew urged the Consumer Financial Protection Bureau to institute some requirements for banks to improve protections for checking account holders. Those requirements included summarizing important fee and account information in a clear and concise format, making overdraft fees proportional to the actual cost of the overdraft loan and prohibiting pre-dispute mandatory binding arbitration clauses in checking account agreements that prevent account holders from using courts to resolve legal violations or deceptive practices.