Bank of America Eases Disclosure Norms of Checking Account Fees and Terms

An arm of Pew Charitable Trusts, a nonprofit organization, has been requesting financial institutions to adopt voluntarily its model one-page disclosure form for more than a year. The model form summarizes policies and costs of checking accounts. The nonprofit trust points out that the disclosure forms of banks invariably run into dozens of pages with complex legal language and fine print sentences. This makes it nearly impossible for consumers to identify key information on features of checking accounts, such as overdraft fees.

The pressure from the consumer-banking policy arm of Pew has received the support of Democrats at Washington. Consequently, Bank of America recently unveiled a disclosure form that is quite simple. It summarizes all the key checking account features, fees, and rats. The disclosure form of Bank of America incidentally incorporates many of the recommendations of Pew.

This move of Bank of America makes it the fifth bank in agreeing to adopt the new disclosure policies. Citigroup Inc., J.P. Morgan Chase & Co., Fifth Third Bancorp, and Capital One Financial Corp. are the other four banks that have already announced their compliance with simpler disclosures. Another seven banks out of the top twelve banks in the United States are yet to adopt this recommendation of Pew. However, Pew mentioned that several credit unions have also implemented this simple disclosure formats.

The Safe Checking in the Electronic Age Project of Pew released a report in April 2011. The report pointed out that nine out of ten American have checking accounts. However, the crucial policy and fee information by banks on checking accounts are never in an easy-to-understand and concise format. This makes it very difficult for consumers to compare the terms and fees of different banks and evaluate accurately the costs of services by each bank. The study clearly revealed that the average length of the checking account disclosures of banks was a voluminous 111 pages. Pew stressed that checking account terms disclosure should also be in an easy-to-understand format, which has become the norm for credit cards.

Pew has been requesting the Consumer Financial Protection Bureau, created after the financial crisis of 2008 to regulate financial products. The other requests of Pew include the usage of streamlined disclosure forms, easier understanding of overdraft options, and limitation on overdraft penalty fees. Senators Richard Durbin and Jack Reed have also made similar requests to the consumer bureau.