The model safe accounts initiative that was started by the FDIC earlier this year and included in the legislation for the new Consumer Financial Protection Bureau has taken another step forward. The FDIC today announced the selection of nine banks that will participate in a test to identify best practices for offering safe financial products for the underserved consumers. In a study commissioned by the FDIC and announced in December 2009, the FDIC estimated that up to 40 million US households were underserved by the US financial institutions.
The safe product initiative is directed at proving simple, understandable products that consumer can feel confident meet their needs and have no hidden gimmicks similar to the debit card overdraft fees and credit card interest rate escalation features that were lambasted during government hearings that resulted in the creation of the Consumer Financial Protection Bureau.
Key features of model safe accounts are that they are largely electronic, are FDIC insured, have reasonable rates and fees proportional to their cost, and are subject to applicable consumer protection laws, regulations, and guidance. The transactional accounts will be “checkless,” and will not charge overdraft or non-sufficient funds fees. Optional services and features may include delivery of financial education, money transfers, bill payment, linked savings to cover overdrafts, and reasonably priced overdraft lines of credit or small-dollar loans.
For more information see the press release at:
http://fdic.gov/news/news/press/2010/pr10252.html
and for a full description of the pilot participants and the accounts they will offer can be found at
: http://www.fdic.gov/consumers/template/.
