Depositor and Consumer Protection
A major component of the FDIC’s mission is to ensure that financial institutions treat consumers and depositors fairly, and operate in compliance with federal consumer protection, anti-discrimination, and community reinvestment laws. The FDIC also promotes economic inclusion to build and strengthen positive connections between insured financial institutions and consumers, depositors, small businesses, and communities.
Rulemaking and Guidance
Home Mortgage Disclosure Act
In March 2018, the FDIC and other FFIEC members revised A Guide to HMDA Reporting: Getting It Right! The guide was updated to reflect changes to the Home Mortgage Disclosure Act (HMDA) in October 2015, and further amendments made in 2017. The guide was designed to help financial institutions better understand the HMDA requirements, including data collection and reporting provisions.
In July 2018, the FDIC released a statement on the impact of the EGRRCPA on HMDA. EGRRCPA provides partial exemptions for some insured depository institutions and insured credit unions from certain HMDA requirements. The FDIC noted that the CFPB would be providing further guidance on the applicability of the EGRRCPA to HMDA data collected in 2018. The agencies retained their diagnostic examination approach regarding HMDA data collected in 2018 and reported in 2019.
Updated Examination Procedures
Updated examination procedures were communicated through revisions to the FDIC Compliance Examination Manual that is publicly available on the FDIC’s website.
In February 2018:
- Truth in Lending Act (TILA) (V-1.1): Several TILA thresholds were updated. Specifically, the escrow exemption and the appraisal exemption thresholds for higher-priced mortgages were increased and dollar amounts for provisions in Regulation Z related to qualified mortgages and Home Ownership and Equity Protection Act loans were updated. The exemption threshold for consumer credit and lease transactions were also increased. The Credit Card Penalty Fee Safe Harbor remained the same as the prior year.
- Home Mortgage Disclosure Act (HMDA) (V-9.1): The asset size exemption thresholds were updated. Additional information regarding implementation of the 2015 HMDA Final Rule and subsequent rulemakings was added.
- Consumer Leasing Act (V-10.1): The exemption threshold for consumer credit and lease transactions was updated.
- Community Reinvestment Act (XI-1.1): Asset-based definitions for “small banks” and “intermediate small banks” were updated.
In May 2018:
- Truth in Lending Act (TILA) (V-1.1): The interagency TILA examination procedures were updated to reflect the 2016 amendments to the Mortgage Servicing Rule originally issued in 2013.
- Real Estate Settlement Procedures Act (RESPA) (V-3.1): The interagency RESPA examination procedures were updated to reflect the 2016 amendments to the Mortgage Servicing Rule originally issued in 2013.
- Servicemembers Civil Relief Act (SCRA) (V-11.1): The SCRA chapter was updated to reflect a statutory amendment extending the sunset date of certain expanded protections for members of uniformed services relating to mortgages and mortgage foreclosure available under the Servicemembers Civil Relief Act.
In June 2018:
- Retail Insurance Sales (IX-2.1): The Retail Insurance Sales chapter was updated to reflect changes to Part 343 to reflect the scope of the FDIC’s current supervisory responsibilities as the appropriate federal banking agency for state savings associations that were previously regulated by the Office of Thrift Supervision.
In August 2018:
- Expedited Funds Availability Act (VI-1.1): The Expedited Funds Availability Act chapter was updated to reflect amendments to Regulation CC regarding check collections and return provisions.
Promoting Economic Inclusion
The FDIC is strongly committed to promoting access to a broad array of responsible and sustainable banking products to meet consumers’ financial needs. In support of this goal, the FDIC:
- Conducts research on the unbanked and underbanked populations,
- Engages in research and development on models of products meeting the needs of lower-income consumers,
- Supports partnerships to promote consumer access to and use of banking services,
- Advances financial education and literacy, and
- Facilitates partnerships to support community and small business development.
Advisory Committee on Economic Inclusion
The Advisory Committee on Economic Inclusion (ComE-IN) provides the FDIC with advice and recommendations on important initiatives to expand access to mainstream banking services to underserved populations. This includes reviewing basic retail financial services (e.g., low-cost, safe transaction accounts; affordable small-dollar loans; savings accounts; and other services), as well as demand-side factors such as consumers’ perceptions of mainstream financial institutions.
In October 2018, the ComE-IN held a meeting that included a discussion of the results from the 2017 FDIC National Survey of Unbanked and Underbanked Households. The committee also heard a presentation on research from the United Kingdom’s Financial Conduct Authority into the effectiveness of mobile text notifications sent to help consumers avoid unwanted fees. In addition, the committee heard a presentation on opportunities to extend economic inclusion in the banking system through youth employment programs.
In December 2018, the FDIC renewed the ComE-IN charter pursuant to the requirements of the Federal Advisory Committee Act (5 U.S.C. App. 2).
FDIC National Survey of Unbanked and Underbanked Households and Related Research
As part of its ongoing commitment to expanding economic inclusion in the United States, the FDIC works to fill the research and data gap regarding household participation in mainstream banking and the use of nonbank financial services. In addition, Section 7 of the Federal Deposit Insurance Reform Conforming Amendments Act of 2005 mandates that the FDIC regularly report on underserved populations and bank efforts to bring individuals and families into the mainstream banking system. In response, the FDIC regularly conducts and reports on surveys of households and banks to inform the public and enhance the understanding of financial institutions, policymakers, regulators, researchers, academics, and others.
In 2018, the FDIC published results from the 2017 FDIC National Survey of Unbanked and Underbanked Households. In addition to updating key reference measurements on participation in the banking system, the report analyzed the methods through which households access their bank accounts, examined consumer use of various mobile banking functions, measured bank branch utilization, and examined household use of and demand for mainstream credit. This information provided a basis for identifying additional opportunities in the report to expand economic inclusion in the banking system. The FDIC made full results and respondent-level data available on https://economicinclusion.gov and also provided users with the ability to generate custom tabulations and to access a wide range of pre-formatted information, including new five-year estimates that provide additional granularity for state and local results. In addition, planning for the 2019 FDIC National Survey of Unbanked and Underbanked Households is complete. A November 2018 notice in the Federal Register proposed the use of a revised questionnaire.
Community and Small Business Development and Affordable Mortgage Lending
In 2018, the FDIC provided technical assistance to banks and community organizations through more than 254 outreach events designed to increase shared knowledge and support collaboration between financial institutions and other community, housing, and small business development resources, and to improve knowledge about the CRA.
The FDIC’s work emphasized sharing information to support bank efforts to prudently provide affordable mortgages, small business credit, and access to safe accounts and financial education.
As part of this effort, the FDIC also launched the Affordable Mortgage Lending Center, a website that houses a number of resources, including the Affordable Mortgage Lending Guide, a three-part guide designed to help community banks identify affordable mortgage products.
By year-end 2018, the Affordable Mortgage Lending Center had more than 15,000 subscribers. Materials from the center have been downloaded more than 12,000 times, and the site has had more than 68,000 page views since its inception.
In addition, the FDIC sponsored sessions with interagency partners covering basic and advanced CRA training for banks. The agencies also offered CRA basics for community-based organizations, as well as seminars on establishing effective bank/community collaborations in more than 27 communities. The FDIC also focused on encouraging community development initiatives in rural communities. This work included workshops to highlight housing needs and programs, economic development programs, and community development financial institution collaborations, including those serving Native American communities.
Advancing Financial Education
Financial education helps consumers understand and use bank products effectively, and sustain a banking relationship. In 2018, the FDIC continued to be a leader in developing high-quality, free financial education resources and pursuing collaborations to use those tools to educate the public.
The Money Smart series of products is available to organizations and individuals who want to teach financial concepts to consumers of all ages; individuals can also use the products to learn the concepts on their own. In particular, the newly updated Money Smart for Adults can help adults build the fundamental financial knowledge, skills, and confidence they need to use banking services effectively.
Youth Financial Education
The FDIC’s Youth Banking Network provides opportunities for 66 banks to learn from one another and FDIC staff about promising strategies to teach financial education concepts to school-aged children using hands-on approaches.
In 2018, Youth Banking Network members participated in periodic learning calls to discuss helpful strategies and resources. For example, the April 2018 call highlighted practical approaches in conducting reality fairs, a strategy to help young people understand the tradeoffs of money choices that they can expect to experience as they enter adulthood.
The FDIC also engaged network participants to develop an operational toolkit of resources that can support the development of new youth savings collaborations. The FDIC drafted new resources for the network based on consultations with members that included:
- Answers to frequently asked questions about operating youth banking programs;
- A tip sheet to help banks communicate with parents and caregivers about the financial education provided through schools;
- A tip sheet to help banks communicate with teachers and administrators to secure an agreement to educate students;
- Strategies bankers can use to make financial education relevant when visiting classrooms to talk about money;
- A guide to reality fairs; and
- A guide to measuring outcomes of youth savings programs.
Many youth banking programs provide financial education training based on FDIC’s Money Smart for Young People curriculum. As part of the FDIC’s ongoing efforts to improve the curriculum, the FDIC obtained feedback from 26 educators who taught 83 Money Smart for Young People sessions as part of a special project. The participating educators overwhelmingly reported that the materials were structured well, easy to use, and initiated critical thinking among students. They also provided valuable suggestions for improvement, such as including more activities, updating the content, and reorganizing content to make it more useful.
The FDIC has begun to revise Money Smart for Young People based on this teacher feedback and other curriculum assessments with a goal of releasing a redesigned and strengthened curriculum tool in mid-2019. As part of our collaboration with the CFPB to promote youth financial capability, the FDIC is exploring how to integrate the CFPB’s research-based Building Blocks for Youth Financial Capability activities into the updated materials.
Financial Education Outreach
Highlights of our outreach include a collaboration with members of the Federal Financial Literacy and Education Commission (FLEC). During Financial Capability Month (April), the members shared and promoted financial education resources using the #FinancialFuture2018 hashtag on social media. During a webinar hosted by FLEC, 200 participants learned about the FDIC’s financial education resources.
The FDIC also collaborated with the U.S. Department of Education and other FLEC agencies on the “Financial Education in America’s Schools” convening on April 27, 2018. This event promoted the exchange of ideas among state and local leaders and highlighted federal resources that support promising ideas.
In addition, the FDIC engaged with youth employment programs to use the Money Smart financial education materials to reach young workers. For example, FDIC staff visited a Job Corps site in Washington, D.C., to provide technical assistance, and later conducted a Money Smart train-the-trainer session for 10 staff members, and planned a banker roundtable.
The FDIC also developed a brochure for workforce program organizations that included tips on how to engage financial institutions to provide financial education or deposit account opportunities for young people. The FDIC joined with NCUA to engage more than 15 cities to participate in the America Saves for Young Workers initiative and learn how to connect young workers with basic deposit accounts at insured financial institutions.
From left, Salvador Arbujo, Tina Queen, April Atkins, and Alberto Cornejo discuss an activity during a Money Smart Train-the-Trainer session for the Community Affairs Branch staff.
The FDIC collaborated with the CFPB to release a Spanish translation of Money Smart for Older Adults. This material had been updated in 2017 to include information and resources to help older adults and their caregivers avoid financial exploitation through fraud and scams.
Finally, the format of the FDIC Consumer News has changed from a quarterly printed newsletter to an electronic monthly article release with printable versions. This allows for more frequent contact with consumers and consistent timely releases of information. It also provides an opportunity to attract new readers through the use of social media in an easy to read format for mobile devices. Through digitation the FDIC can measure and improve communication and outreach efforts.
Money Smart for Adults
In November 2018, the FDIC updated the Money Smart for Adults curriculum, building on insights gained from more than 17 years of experience with the Money Smart program. The revised curriculum, field-tested twice with community organizations and banks, features 14 modules that cover basic financial topics for use during group training or one-on-one work. Specifically, the updated curriculum features:
- Expanded content on topics such as mobile banking, reading a pay statement, renting an apartment, creative ways to save money, and updated information on standard topics such as credit reports and scores;
- Vibrant graphics and discrete sections so instructors can create effective training sessions by choosing topics of interest to training participants;
- “Try It” activities that provide engaging opportunities for participants to practice what they’re learning during training in many contexts, including realistic scenarios;
- “Apply It” activities to help participants apply what they have learned to their own lives, either during or after training;
- “Key Takeaways” that briefly summarize the main message of each section;
- A “Take Action” section in every module that encourages participants to identify at least one thing they plan to do because of what they learned during the training;
- A new Guide to Presenting Money Smart for Adults that includes tools to help instructors present interactive, non-biased training using the updated curriculum, such as “roadmaps” to create customized training across modules, fun and engaging introductory activities to energize participants to learn, and detailed checklists to prepare for training; and
- An updated supplement with scenarios featuring individuals with disabilities thinking about a financial decision.
More than 1,500 organizations were trained on the updated materials before year-end, including two national webinars, and plans are underway to provide training to many more organizations.
In addition, the FDIC plans to release a self-paced online learning tool based on the updated curriculum in early 2020.
Money Smart for Small Business
The FDIC convened forums and roundtables featuring safe small business products and services, and provided information and technical assistance to support initiatives geared to increase access to capital for small businesses. In 2018, the FDIC completed 74 events and activities primarily focused on small business.
The Small Business Administration (SBA) and its partner networks – including the Small Business Development Centers, Women’s Business Centers and SCORE Chapters – the Federal Trade Commission, CFPB, and other stakeholders collaborated with the FDIC to produce a revised version of the Money Smart for Small Business Credit and Banking Modules to address information needs in response to a lending marketplace where entrepreneurs may be unaware of safe and affordable financing options and may be engaging in financing with terms they do not fully understand.
Money Smart Alliance
The maximum potential of the curriculum is reached when banks collaborate with non-profits or other community-based organizations to bring Money Smart training to local communities, and, when appropriate, connect the training to banking products and services that respond to the needs of participants. Through the Money Smart Alliance, the FDIC recognizes organizations that commit to using Money Smart and that want to receive regular updates and training tips to enhance their use of the curriculum.
More than 450 organizations joined the Alliance during 2018, bringing the total members to 1,062. The Alliance experienced a 34 percent growth during 2018 compared to year-end 2017. This growth is largely attributable to the Money Smart Advance Team effort that built engagement with organizations that have or will deliver Money Smart to adults.
The FDIC engaged Alliance members through quarterly webinars and one-on-one calls. Alliance members also learned about the updated Money Smart for Adults curriculum (and had the opportunity for early review of the modules) starting in September 2018, several weeks before the broader public release.
Partnerships for Access to Mainstream Banking
The FDIC supported community development and economic inclusion partnerships at the local level by providing technical assistance and information resources throughout the country, with a focus on unbanked and underbanked households and low- and moderate-income communities. Community Affairs staff support economic inclusion through work with the Alliances for Economic Inclusion (AEI), Bank On initiatives, and other coalitions originated by local and state governments, and in collaboration with federal partners and many local and national non-profit organizations. The FDIC also partners with other financial regulatory agencies to provide information and technical assistance on community development to banks and community leaders across the country.
In the 12 AEI communities and in other areas, the FDIC helped working groups of bankers and community leaders develop responses to the financial capability and services needs in their communities. To integrate financial capability into community services more effectively, the FDIC supported seminars and training sessions for community service providers and asset-building organizations, workshops for financial coaches and counselors, promotion of savings opportunities for low- and moderate-income people and communities, initiatives to expand access to savings accounts for all ages, outreach to bring larger numbers of people to expanded tax preparation assistance sites, and education for business owners to help them become bankable.
The FDIC worked across the nation, including in 16 targeted communities, to convene 12 forums and 19 roundtables that helped advance strategies to expand access to safe and affordable deposit accounts and engage unbanked and underbanked consumers. The FDIC provided technical assistance to bankers, coalition leaders, and others interested in understanding opportunities for banking services designed to meet the needs of the unbanked and underbanked.
In total, the FDIC sponsored more than 55 events, 80 outreach activities, and 13 speaking engagements and exhibitions during 2018 that provided opportunities for partners to collaborate on increasing access to bank accounts and credit services, opportunities to build savings and improve credit histories, and initiatives to significantly strengthen the financial capability of community service providers who directly serve consumers with low or moderate incomes and small businesses.
Consumer Complaints and Inquiries
The FDIC helps consumers by receiving, investigating, and responding to consumer complaints about FDIC-supervised institutions and answering inquiries about banking laws and regulations, FDIC operations, and other related topics. In addition, the FDIC provides analytical reports and information on complaint data for internal and external use, and conducts outreach activities to educate consumers.
The FDIC recognizes that consumer complaints and inquiries play an important role in the development of strong public and supervisory policy. Assessing and resolving these matters helps the agency identify trends or problems affecting consumer rights, understand the public perception of consumer protection issues, formulate policy that aids consumers, and foster confidence in the banking system by educating consumers about the protection they receive under certain consumer protection laws and regulations.
Consumer Complaints by Product and Issue
The FDIC receives complaints and inquiries by telephone, fax, U.S. mail, email, and online through the FDIC’s website. In 2018, the FDIC handled 18,334 written and telephonic complaints and inquiries. Of the 12,016 involving written correspondence, 5,306 were referred to other agencies and 6,710 were handled by the FDIC. The FDIC responded to 97 percent of written complaints within time frames established by corporate policy, and acknowledged 100 percent of all consumer complaints and inquiries within 14 days. As part of the complaint and inquiry handling process, the FDIC works with the other federal financial regulatory agencies to ensure that complaints and inquiries are forwarded to the appropriate agencies for response. The FDIC carefully analyzes the topics and issues involved in complaints about FDIC-supervised institutions. The number of complaints received about a specific bank topic and issue can serve as a red flag to prompt further review of practices that may raise consumer protection or supervisory concerns.
In 2018, the four most frequently identified topics in consumer complaints and inquiries about FDIC-supervised institutions concerned checking accounts (19 percent), consumer line of credit/installment loans (15 percent), credit cards consumer/business (14 percent), and residential real estate (10 percent). Issues most commonly cited in correspondence about checking accounts were concerns with account discrepancies or transaction errors, and fees and service charges. Consumer loan complaints and inquiries most frequently described issues with reporting erroneous account information and collection practices, while consumer correspondence about credit cards most often raised issues regarding reporting of erroneous account information and billing disputes/error resolution. Correspondence regarding residential real estate related to disclosures, inaccurate appraisal reports, and loan modifications.
The FDIC also investigated 63 Fair Lending complaints alleging discrimination during 2018. The number of discrimination complaints investigated has fluctuated over the past several years but averaged approximately 67 complaints per year between 2013 and 2018. Over this period, 47 percent of the complaints investigated alleged discrimination based on the race, color, national origin, or ethnicity of the applicant or borrower; 14 percent related to discrimination allegations based on age; 13 percent involved the sex of the borrower or applicant; and 8 percent concerned disability.
Consumer refunds generally involve the financial institution offering a voluntary credit to the consumer’s account, often as a direct result of complaint investigations and identification of a banking error or violation of law. Through December 2018, consumers received more than $448,500 in refunds from financial institutions as a result of the assistance provided by the FDIC’s Consumer Response Center.
Public Awareness of Deposit Insurance Coverage
An important part of the FDIC’s deposit insurance mission is to ensure that bankers and consumers have access to accurate information about the FDIC’s rules for deposit insurance coverage. The FDIC has an extensive deposit insurance education program consisting of seminars for bankers, electronic tools for estimating deposit insurance coverage, and written and electronic information targeted to both bankers and consumers.
The FDIC continued its efforts to educate bankers and consumers about the rules and requirements for FDIC insurance coverage during 2018. For example, as of December 31, 2018, the FDIC conducted three telephone seminars for bankers on deposit insurance coverage, reaching an estimated 4,473 bankers participating at approximately 1,278 bank sites throughout the country. The FDIC also features deposit insurance training videos that are available on the FDIC’s website and YouTube channel.
As of December 31, 2018, the FDIC Call Center received 96,703 telephone calls, of which approximately 38,681 were identified as deposit insurance-related inquiries. The FDIC Call Center handled approximately 20,102 inquiries and Deposit Insurance subject matter experts (SME) handled 18,579 complex telephone calls identifying a total of 50,548 deposit insurance issues. In addition to telephone inquiries about deposit insurance coverage, the FDIC received 1,339 written inquiries from consumers and bankers identifying a total of 2,248 deposit insurance issues. Of these inquiries, 100 percent received responses within two weeks, as required by corporate policy.