Proposed changes to rules around advertising FDIC insurance coverage have been criticised by banking organizations as being “overly prescriptive”.
The Federal Deposit Insurance Corporation (FDIC) is exploring changes to its rules governing how banks and other insured institutions notify customers that they are covered by the corporation.
The changes are designed to update its rules in light of the rise of digital and fintech companies, as well as improve the language used to explain insurance status to customers. The FDIC has had to act against several crypto companies in recent months after they made false or misleading claims about customer deposits being protected by federal insurance.
However, the American Bankers Association (ABA) and Bank Policy Institute (BPI) wrote a joint letter to the FDIC last week calling for “a less prescriptive approach”.
“While the FDIC’s proposed requirements rightly aim to prevent misleading or confusing customers about the insured status of banking products, certain aspects of the proposal are overly prescriptive, which may unfortunately make the customer experience more confusing,” the ABA and BPI in the letter.
“For example, the proposal would require banks to display the FDIC sign on landing dashboards for customers’ accounts, which could mislead the customer into thinking that all the accounts referenced via the dashboard – including non-deposit accounts, such as investment accounts – are FDIC-insured.”
Instead, the two organizations said the FDIC’s modernized rules should provide flexibility so as to “provide clear and conspicuous disclosures that align with the modern ways that banks reach their customers”.
The FDIC should allow banks to use insurance signage that is suitable to “modern branch design and possible future evolution”, and should distinguish clearly between branches and non-branches. In addition, the ABA and BPI called for the FDIC to ensure that its definition of “non-deposit product” was amended to clearly include crypto-assets.
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