WASHINGTON — The Federal Deposit Insurance Corp. this week stated concerns about banks labeling certain customer fees as being related to the cost of deposit insurance.
In a letter to all institutions, the FDIC said some depositors have complained about being charged an "FDIC fee," "FDIC assessment" or similarly-labeled fee. The agency said some institutions have apparently referred customers' questions about the fees on to the FDIC.
While banks "are not prohibited from passing the costs of deposit insurance on to customers, the FDIC discourages institutions from specifically designating that a customer fee is for deposit insurance or from stating or implying that the FDIC is charging such a fee," the agency said.
The FDIC warned that customers could get the wrong idea about fees so explicitly tied to the agency.
"The FDIC does not charge [insured depository institution] customers for deposit insurance. Thus, it is inaccurate, and therefore misleading, for an IDI to state or imply that a particular fee charged to a customer is required by the FDIC or to refer customers to the FDIC for an explanation of the fee," Mark Pearce, head of the agency's depositor and consumer protection division, and acting general counsel Richard Osterman Jr. wrote in the July 9 financial-institution letter.
Previous advisory opinions had stated the FDIC allows institutions to provide notice that a fee is related to deposit insurance, but only if the amount of the cost is correctly calculated. However, the letter said following the advent of the FDIC's more recent system of charging banks deposit insurance premiums based on their individual risk, those previous opinions "are obsolete."
"They are withdrawn and superseded by this" letter, Pearce and Osterman wrote.
They also warned that designating an "FDIC fee" assessed on customers could indirectly reveal confidential supervisory information about the institution, since such information goes into the calculation of a bank's premium owed to the FDIC.
"For these reasons, the FDIC encourages institutions to review fees charged to customers and to refrain from identifying specific fees as 'deposit insurance fees,' 'FDIC fees,' or other similarly described fees and from referring customers to the FDIC for an explanation of the fee," they wrote. "To the extent the institution chooses to charge fees to recoup deposit insurance assessment costs, it should take actions to ensure it adequately addresses the concerns set out in this FIL."