Business Regulation
Banks Will Have to Clean Up Their Practices, Research Firm Says
Kiplinger News
August 13, 2010
The Dodd-Frank financial reform bill changes the landscape of derivatives trading and sets standards for unwinding failing banks - but the provision that will affect the most people may be the creation of the Bureau of Consumer Financial Protection.
According to research firm Javelin Strategy & Research, the BCFP provision will result in major changes in the way banks interface with their customers. Regulators, Javelin says, will seek out unfair practices in "exotic mortgages, private education loans, credit scores and overdraft fees."
The way financial firms treat unbanked customers may face scrutiny, as well.
"Providers should modernize the options they offer customers to help them monitor and manage their money," Javelin suggests. Indeed, the popularity of personal finance sites like Mint.com indicates that consumers want to be able to track spending and income more closely; banks may provide increased money-management functionality in the future.
Javelin notes that consumer satisfaction with banks has dropped from 92 percent six years ago to 79 percent this year. The fees and penalties that financial institutions imposed may be partly to blame - but those practices should be examined more closely when the financial reform bill takes full effect.
