As mentioned, the OCC and FDIC have actually prefaced their proposed tips of deposit advance services and products on security and soundness issues. But, there is certainly small proof to offer the premise why these items pose any safety and soundness dangers to your banks offering them. You should note some banks have actually offered deposit advance items for many years with little to no or no safety and soundness issues, therefore we are not sure regarding the foundation for the Agencies’ concerns over institutional security and soundness. Close regulatory assessment among these items has yielded reasonably very good results and, notably, demonstrated that close working relationships between banking institutions and regulators may result in the growth of wise and reasonable services and products. Furthermore, as discussed below, bank-offered deposit advance items include materially less danger of problems for customers than similar services and products provided by non-depository providers.

Reputational Danger

There clearly was little proof customer dissatisfaction with bank-offered deposit advance items. To your contrary, customer satisfaction by using these items is oftentimes extremely high with below normal issue prices. For instance, in one single bank’s survey that is recent of advance clients, 90 % of participants ranked their general experience with this product as “good” or “excellent”. An additional study by an alternative bank, the client satisfaction score ranked greater when it comes to bank’s deposit advance product than just about any other item provided by that bank. Continue reading →