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Financial institutions will need a "well-coordinated and substantial effort over the next seven months" to deal with the changes made last week to Regulation E, according to a report published Wednesday by international management consulting firm Oliver Wyman. The Federal Reserve Board announced an overdraft rule that would force banks to get customers' permission before enrolling them in such programs. That rule is in addition to any bills from the House and Senate banking committees President Obama signs into law. Additional rules may include monthly and yearly limits on overdraft fees. One of the most important questions banks will need to answer is how to replace profits lost from overdraft fees, says Aaron Fine, the report's author and partner at Oliver Wyman. "The value and economics" of checking accounts have become "very dependent on overdraft fees," Fine tells CardLine sister publication ATM&Debit News. "I don't think that was intentional on the banks' part, but it's evolved that way because of the rise of the debit card," he adds. In his report, "Change to Consumer Overdrafts: Five Questions to Address Before July 1st," Fine also asks how will banks ensure customers have the chance to choose overdraft protection. "Reaching out to and motivating change in consumers … is a monumental task and it is now one that must take place within the next seven years," Fine writes. He continues that checking account customers are "infamously difficult to move" as mail, e-mail, phone calls and online pop-up prompts are increasingly ignored. But banks must find a way as "the full glare of legislative and regulatory scrutiny" will force accurate and comprehensive documentation of consent," Fine writes.
