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More Transparency and Accountability; Less Bureaucracy

Posted by at 9:32 am on August 10, 2011

The Consumer Financial Protection Bureau, set up in the wake of the 2008 credit crisis, officially launched in late July.  Some opponents have argued the bureau amounts to regulatory overkill, while supporters say it is necessary in order to curtail lending practices that have hurt consumers.

One area of focus for the federal watchdog is to address unfair practices related to overdraft fees.  A recent debit-card overdraft suit won class-action status thrusting this issue back under the spotlight. At the same time two recent surveys suggest conflicting consumer opinions on so-called “unfair” overdraft enrollment fees.

  • The service remains popular with some people. The financial consulting firm Moebs Services said that about 77 percent of bank customers have opted in for overdraft fees.
  • Americans with checking accounts agree overwhelmingly that they want banks to be more transparent with terms, conditions and fees, even if that means more government oversight, according to results of a new survey by the Pew Health Group.

The Federal Rules governing Overdraft Enrollment Fees and other regulations including the proposed Bill Shock Rules for Wireless Providers and EU Roaming Regulations are just a few examples of regulatory overkill that are impacting large consumer-facing businesses.  Companies are now required to add additional customer touch points to communicate transactional details about accounts and gain consumer consent for future communications and in many cases, future billings.

I would argue that that less government is better.  Proactive Customer Communications enable consumer-facing businesses to be more transparent in their customer communications by providing timely, relevant and actionable information and empower consumers to make informed decisions that suit their interests and personal lifestyles.  I recommend the following best practices for any consumer-facing business looking to build more profitable, lifelong relationships with their consumers:

  • Secure Consent for Value-Based Communications — Consumers are willing to opt-in for communications they view as relevant and valued.  A recent study conducted by financial consulting firm, Moebs Services, states that about 77 percent of bank customers have opted-in to receive overdraft fees.
  • Offer Real-Time Communications — Timely communications provide actionable information to help consumers make informed decisions and take control of their finances.  Use text alerts to notify customers when their cell phone is roaming.  Likewise, consumers that opt-in to overdraft programs may curb their spending if alerted to each transaction that incurs a fee.
  • Empower Your Customers — Proactive communications should be interactive so that consumers can easily and conveniently respond to time-sensitive information.  Don’t just alert a consumer when they are approaching their service plan limit. Simultaneously offer convenient, self-service options to “right size” the service plan and avoid overage charges.

What best practices has your organization developed to engage in more transparent and proactive communications with your consumers?

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