Discretionary Overdraft Program Best Practices Regulatory Compliance, Risk Management & Customer Service

By Strunk, William | ABA Banking Journal, April 2004 | Go to article overview

Discretionary Overdraft Program Best Practices Regulatory Compliance, Risk Management & Customer Service


Strunk, William, ABA Banking Journal


Overdraft privilege ("ODP") services are increasingly important and successful programs among banks nationwide because of the benefits realized by the financial institutions, and more importantly, their customers. Therefore, it is appropriate and imperative that banks and any third party vendors they engage adhere to a very high set of standards for consumer service. The goal of these standards or Best Practices should be to refine and formalize key processes and eliminate consumer confusion.

Let's look at three key areas: regulatory compliance; risk management; and most importantly, customer service as they relate to ODP.

Regulatory Compliance

It goes without saying that all banks routinely conduct compliance reviews to assure their services are in accordance with both state and federal regulations. But what about ODP service programs offered either by the banks themselves or by third party vendors. How should these programs, in particular third party programs, be evaluated?

First, make sure the vendor company can provide evidence that their organization has in place, verifiable operational procedures and engagements with regulatory and legal experts specifically dedicated to regulatory compliance in these areas. In that way, the financial institution will be assured that the vendor has an ongoing and real investment in, and commitment to, compliance and matters involving legal due diligence.

Second, beware of blanket compliance or indemnification guarantees by any third party. The old saying "if it looks too good to be true" should serve as a guideline. Regulations are not static. Any reputable organization knows they can and will change. Therefore, beware of 'foolproof' assurances or guarantees.

Risk Management

A financial institution implementing any new program should assess risk as part of a rigorous due diligence process. Financial risks and risks to customer good will are both important.

To minimize financial risk, carefully study the contract presented by the ODP vendor. Are termination clauses restrictive or detrimental to the bank's financial and strategic risk perspective? The cancellation agreement is critically important.

How is the vendor's fee structured? Do they share the risk of the bank's investment in an ODP program? …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Discretionary Overdraft Program Best Practices Regulatory Compliance, Risk Management & Customer Service
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.