The Consumer Financial Protection Bureau (CFPB) has released recommendations on a provision enacted by Congress over junk fees.
The law prohibits large banks and credit unions, institutions with over $10 billion in assets, from imposing excessive fees on customers for supplying basic information about their own accounts, which the CFPB says they are entitled to access.
The regulator has clarified this against a backdrop of larger banks shifting away from the relationship banking model, which prioritizes high levels of customer service.
Rohit Chopra, CFPM director, said: “While small relationship banks pride themselves on customer service, many large banks erect obstacle courses and impose junk fees to answer basic questions.
“While the biggest banks have abandoned the relationship banking model, federal law still requires them to answer certain customer inquiries completely, accurately, and in a timely manner.”
The guidance is part of a wider push by the Biden-Harris administration to crack down on junk fees across the financial sector, including a proposed rule from the Federal Trade Commission (FTC) to ban hidden fees.
The CFPB is also set to propose a rule later this month which, if finalized by the bureau, would require banks to allow customers to safely share their banking data with other banks.
This reform would “ensure financial companies compete based on service quality and up-front pricing, deterring junk fees”, according to a statement from the White House.
The CFPB has previously drawn criticism from banking groups over its proposed changes to credit card fees. The CFPM said the proposal to limit late fees on credit cards would save consumers money, but the American Bankers Association (ABA) has claimed that the changes would reduce competition and raise the cost of credit for consumers.