On Wednesday,
Bank of America Corporation
(
BAC
) said that it will offer customers a new, easy-to-read two-page
statement with complete information about fees, terms and primary
features for checking accounts. This move follows similar steps
taken by other major U.S. financial institutions.
Banking giants such as
J.P. Morgan Chase & Co.
(
JPM
),
Citigroup, Inc.
(
C
),
Capital One Financial Corp.
(
COF
) and
Fifth Third Bancorp
(
FITB
) have already decided to include easier disclosures. Constant
pressures from Pew's consumer banking policy wing and Democrats on
Capitol Hill forced these banks to opt for such disclosures.
Non-profit organization Pew Charitable Trust's consumer-banking
policy arm was repeatedly asking the abovementioned financial
organizations to permanently accept its single-page model
disclosure form, which abbreviates the checking-account terms and
costs. According to Pew, generally the disclosure forms of banks
contain a number of pages on legal terms and provide inconspicuous
details or conditions, making it difficult for costumers to look
for primary checking-account guidelines.
In 2011, Pew's Safe Checking in the Electronic Age Project surveyed
and concluded that although 90% of the U.S. population has checking
accounts, banks do not provide summarized information on terms and
fees that can be easily identified by the consumers, to assess the
costs of the services.
Further, the research found that the average bank disclosures for
key checking accounts contained 111 pages, which was cumbersome for
customers. Pew argued that checking-account policies should be
patterned like credit cards disclosures, enabling the customers to
understand it easily.
Pew has also been constantly advising the Consumer Financial
Protection Bureau, which was created during the 2008 financial
crisis, for monitoring financial products to make it mandatory for
all financial organizations to use more rationalized disclosure
forms, make the terms of overdraft fees easier to comprehend and to
put a limit on the maximum overdraft penalty fees that can be
charged by banks.
Pew believes that the measures taken by BofA will encourage other
banks to follow the same, which in turn will be beneficial for the
consumers.
Management at BofA believes that these measures will enable the
consumers to effortlessly get information about their accounts.
Bank of America currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. Considering the fundamentals, we
maintain our long-term Neutral recommendation on the stock.
BANK OF AMER CP (BAC): Free Stock Analysis
Report
CITIGROUP INC (C): Free Stock Analysis Report
CAPITAL ONE FIN (COF): Free Stock Analysis
Report
FIFTH THIRD BK (FITB): Free Stock Analysis
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JPMORGAN CHASE (JPM): Free Stock Analysis
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