|
[Main Tabs]
[Table of Contents - 5000]
[Index]
[Previous Page]
[Next Page]
[Search]
5000 - Statements of Policy
{{10-30-98 p.5271}}
JOINT POLICY STATEMENT ON BASIC FINANCIAL SERVICES
The Board of Governors of the Federal Reserve System, Federal
Deposit Insurance Corporation, Federal Home Loan Bank Board, National
Credit Union Administration, Office of the Comptroller of the Currency,
Conference of State Bank Supervisors, National Association of State
Credit Union Supervisors, and National Association of State Savings and
Loan Supervisors are issuing this joint policy statement to encourage
the efforts of trade associations and individual depository
institutions regarding the offering of "basic financial
services." 1
The economic environment in which financial institutions operate has
changed over the past few years, due in part to increased competition
from outside the traditional depository institution structure,
increased cost of funds following deregulation of interest rates, and
interest rate volatility. As a consequence, many institutions have had
to adopt new strategies to market their services, generate income,
manage risk, and reduce costs. Some institutions have begun to
explicitly price their products, consolidate or eliminate services they
believe to be unprofitable, and close branch offices. In many
instances, institutions have increased service charges, imposed new
fees, and raised minimum balance requirements.
While such adaptation may be a necessary response to competitive
markets, considerable concern has developed about the potential impact
of these changes in effectively denying or reducing convenient access
of many individuals to the payments system and to safe depositories for
small savings. Because credit availability is often dependent on an
account relationship with a financial institution, access to credit for
low-income or young consumers may also be adversely affected.
While a significant number of consumers have never had a deposit
account, some research studies reflect declines in account ownership
that may be cause for concern. For example, between 1977 and 1983 the
proportion of families headed by a younger person having checking
accounts decreased, as did the number of families from the lowest
income group, regardless of age. The proportion of young families
having either a savings or a checking account also declined. While the
cause of these declines is not always clear, the surveys do suggest
that a significant number of individuals or families do not have a
deposit relationship of any kind.
Legislation dealing with basic financial services has been
introduced at both the federal and state level as a result of these
concerns. The industry has also responded. Many financial institutions
have independently undertaken to develop and implement new measures to
meet minimum consumer needs. They are offering basic services, such as
low-cost transaction and savings accounts with low or no minimum
balances, accounts for consumers who use a limited number of checks or
drafts, and other accounts on which minimal charges are made for
account maintenance. Institutions that have for years offered such
services to particular groups of customers are now advertising their
availability more widely. Other institutions are exploring and finding
ways to maintain a physical presence in low- and moderate-income
neighborhoods even while reducing the expense normally associated with
full branch facilities. Trade groups too have joined in these efforts
to encourage the offering of such services at affordable prices. The
American Bankers Association and Consumer Bankers Association, for
example, have called upon their members to address the continuing
interest in basic banking services.
The member agencies of the Federal Financial Institutions
Examination Council and the associations of state supervisors wish to
encourage such efforts by trade associations and individual depository
institutions that promote the offering of basic financial services,
consistent with safe and sound business practices. While the specific
type of services will, of course, vary because of differences in local
needs and in the characteristics of individual institutions, we
encourage efforts to meet certain minimum needs of all consumers, in
particular:
{{10-30-98 p.5272}}
• the need for a safe and accessible place to keep money;
• the need for a way to obtain cash (including, for
example, the cashing of government checks);
• the need for a way to make third party payments.
We believe that industry trade associations have a key role to play
in this effort, and are in a position to encourage a constructive
response without the rigidities of legislation or regulation. We
realize that some associations have such programs already underway.
These programs could usefully:
1. Encourage members to offer and appropriately publicize
low-cost basic financial services such as those listed above.
2. Survey the current availability of such services among
member institutions.
3. Make available to members not providing such services
material reflecting the successful experiences of other organizations.
By order of the Board of Directors, November 4, 1986.
[The page following this is 5289.]
1 The Comptroller of the Currency previously issued a banking
circular on this subject to all national banks in August 1985. Go Back to Text
[Main Tabs]
[Table of Contents - 5000]
[Index]
[Previous Page]
[Next Page]
[Search]
|
