Phoenix, AZ Acting Comptroller of the Currency
Julie L. Williams said today disclosures to accomplish consumer protection
objectives in the banking business are one important aspect of the current
debate concerning regulatory burden and that, despite good intentions and
enormous resources expended, disclosures are not working well for consumers,
and are imposing unnecessary burdens on bankers.
Consumers who see just a haze of fine print,
instead of the information they want and need, may understandably conclude that
certain information is deliberately being obscured, Ms. Williams said in a
speech before the Economic Group Regulatory Paperwork Reduction Act (EGRPRA)
Outreach Meeting. And banks large and
small complain about the cost and burdens of various consumer compliance
requirements. The expense associated
with developing and distributing disclosures would be more bearable if people
thought all the effort effectively accomplished their purpose: to get vital
information into the hands of consumers to make informed choices and to promote
healthy competition among financial providers.
Ms. Williams noted that one of the great
strengths of our financial system is that the government does not dictate the
price and terms of products and services that may be offered. But in order for the free market to work,
she said, consumers need to have the means to make informed decisions.
Citing credit cards as an example, Ms. Williams
pointed out that there are two areas where current developments hold promise of
positive developments to produce better, more effective and less burdensome
approaches to consumer disclosures; first in Congress and second through
revisions to regulations including Regulation Z.
Ms. Williams hoped that next weeks Senate
Banking Committee hearing on credit card disclosures will be an opportunity not
simply to criticize the current state of credit card disclosure, but to begin a
re-examination of the processes of developing, designing, implementing,
overseeing and evaluating consumer disclosures for financial products and
services.
Our goal here ought to be consumer disclosures
that consumers can understand and find useful, provided in a manner than
minimizes unnecessary regulatory burdens on the company required to provide
them, she said.
Ms. Williams highlighted the Food and Drug
Administrations Nutritional Facts label as an efficient and effective
consumer disclosure and she summarized the development of the label as a model
on how to achieve effective and useful consumer disclosures.
The development of the FDAs nutritional label
began, she noted, with a clear statement by Congress of the objectives the FDA
was charged to accomplish and gave that agency the flexibility to delete or add
requirements in the interest of assisting consumers. The FDA was given the time and discretion to design, conduct
intensive research, poll focus groups to elicit ideas on the kind of
information consumers wanted to see, and test formats with target consumer
audiences to determine what actually worked.
Given the example of the concise disclosure
that resulted from the FDAs process, I would hope legislators would require
that regulators take into account both the burden associated with implementing
any new standards, together with the effectiveness of those disclosures, Ms.
Williams said. The EGRPRA effort as it
plays into regulatory burden reduction legislative proposals that are currently
being developed is the perfect opportunity for Congress to do this.
Ms. Williams informed the bankers that the OCC
took the unusual step of submitting a comment letter responding to the Federal
Reserve Boards Advance Notice of Proposed Rulemaking on Regulation Zs
open-end credit rules stressing several key themes including the use of
multi-phase consumer testing to develop and improve disclosures for financial
service products; that extensively detailed, prescriptive rules risks consumer
information overload; and the need to ensure that credit disclosure rules keep
pace with the evolution of credit products and industry practices.
Quality rather than quantity; disclosure in the
spirit of openness and free markets rather than as a mere compliance gesture;
research rather than guessworkthese are values that should guide us, Ms.
Williams concluded. If we take these
values to heart, I believe we can develop a framework for consumer compliance
disclosures that work effectively for consumers and efficiently for the bankers
that seek to serve them.
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The Office of the
Comptroller of the Currency was created by Congress to charter national banks,
to oversee a nationwide system of banking institutions, and to assure that
national banks are safe and sound, competitive and profitable, and capable of
serving in the best possible manner the banking needs of their customers.