What have the legislators learned from the Durbin Amendment? By the looks of the new Prepaid Card Consumer Protection Act, not much. It is not easy to be a politician and have to balance serving the interest of the people and at the same time create positive conditions to allow businesses to create new jobs or at least maintain the ones they are providing today. These two factions, consumers and businesses, need to be balanced constantly by politicians, for both are important: It is the people that elect them while businesses increase prosperity through job creation, taxes, or other contributions … Continue Reading →

Senator Robert Menendez is at it again. Just when we thought that banking regulation would go on hiatus for the holiday season, the senator has introduced The Prepaid Card Consumer Protection Act. The primary aspects of the bill center on consumer disclosure of all fees, and require Reg E compliance on lost or stolen cards. A core component of the legislation is the elimination of some fees and the imposition of limits on other fees. We would all agree that consumer disclosure is the right thing to do for the industry, but further revenue erosion on general-purpose reloadable (GPR) cards … Continue Reading →

The need for interchange regulation, hotly debated by the U.S. Congress for more than a year, ended in the passage of the Durbin Amendment. Not surprisingly, this resulted in U.S. banks implementing “replacement” revenue streams in the form of fees. Price-fixing an industry has never worked and does not work now. The Durbin Amendment’s attempt to do something right for consumers has become detrimental to them. What does it all mean? Consumers will pay more for demand deposit relationships and the debit cards that access them. Some consumers will switch to credit cards. Those who can no longer afford checking … Continue Reading →

In a recent Aite Group survey of bank ATM channel executives at 20 of the top 150 U.S. financial institutions, we examined the strategic, technological, and operational issues of the bank ATM channel. Despite bank executives’ desire to develop a more complete customer service experience via the ATM, economic uncertainty and the cost of upgrading to new equipment continue to present challenges. In addition, the recent increase in bank consolidations and mergers has kept ATM executives focused on fleet integration rather than advancements in functionality and features. Only 12% of respondents say their ATMs are integrated with their respective banks’ customer relationship … Continue Reading →

The mobile recording technology market has responded to the U.K. Financial Services Authority’s (FSA’s) requirements to introduce mandatory call recording for what the regulations describe as “relevant conversations” by those who provide financial advice and execute financial transactions by mobile phone. The scope of the technology varies. Compliant Phones, for example, has developed second-generation Inline Mobile Recording to work across any network worldwide, overcoming limitations of network-only-based solutions for global customers, while BT and Teleware have announced the immediate availability of a network-based recording service for mobile devices, specifically to address the requirements under the U.K. FSA regulations. Cross-border phone … Continue Reading →

This Friday — August 12, 2011 — the Dodd-Frank whistleblower provisions take effect. Introducing financial inducements into prospective informants’ complex, emotionally fraught decision process may subtly alter compliance departments’ relationships with employees and regulators. Importantly, the rules do not require employees to follow their firms’ internal compliance procedures before advising the Securities and Exchange Commission (SEC) about possible securities law violations. If internal reporting were mandatory, individuals in possession of what the SEC calls “quality tips” might well choose to remain silent for a variety of reasons. They might, for instance, mistrust the compliance managers’ confidentiality, doubt their effectiveness, or … Continue Reading →

This is my fourth Durbin Amendment blog posting since April 2011. Since the Federal Reserve Bank posted the rules, my fury over government price fixing has reached an all-time high. The concurrent political wrangling to sort through the U.S. budget and looming deficit has only compounded my fury. It is clear that elected officials are merely posturing to get re-elected or gain majority power in congress. This is just more evidence that no elected official is truly capable of taking the higher road when it comes to the state of the U.S. economy or our society as a whole. Case … Continue Reading →

The Federal Reserve Bank (FRB) has finally and reluctantly released compliance rules for the Durbin Amendment. It would be difficult to declare anyone a winner in this long-protracted battle; merchants want to eliminate interchange, banks cling on to the old ways of making money, and the once-revered Visa and MasterCard have been stripped of many of their powers. Gone are exclusivity and transaction-routing dominance.  Visa and MasterCard are left with shrinking margins on core transaction volume. Worst off is the consumer. Merchant cost savings will be kept by the merchants, banks will increase the cost of checking relationships, and the … Continue Reading →

On June 30, the Office of the Comptroller of the Currency (OCC), which regulates the largest U.S. banks, sent out a news release entitled “ … Guidance to Banks Regarding Foreclosure Practices,” which instructed the banks under its control to conduct self-assessments of their residential mortgage foreclosure practices and correct any weaknesses. It went on to say that OCC examiners will be reviewing both the self-assessments and the corrective actions during this year’s examinations. What it didn’t say is that the original review of the foreclosure practices of the 14 largest mortgage servicers was a joint investigative activity by the … Continue Reading →

Financial services organizations have to varying degrees been experimenting with integrating their fraud prevention and anti-money laundering (AML) functions into cohesive financial crimes units. On the surface, this concept makes a lot of sense. There is an increasing amount of overlap between the criminal elements — overlap that fraud and AML groups are trying to catch. Many technology solutions introduced into the market over the last decade are positioning themselves as solutions for AML and fraud prevention needs. Logical solutions and realistic solutions do not always go hand in hand, however, particularly in the complex world of financial services. As … Continue Reading →