[TheBank]

We have an AOD program where a standard $ amount is given to an account. We have found a few accounts managers have lowered the AOD limit below our standard $ amount. Some were lowered due to heavy reliance on AOD, not repaying the OD timely. Would it be an issue, either Reg B or ODP Guidance to have these varying limits? If so, now that we are in this situation, what corrective action must we do? Are we required to change them back to the standard $ amount? Or would documenting the reason for lowering the amount be sufficient if based on the customer’s credit performance? Would the account history suffice for documenting performance?

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[kmeade]

Following this thread.

[rcooper]

I don’t have definitive information for you on this, but here are my thoughts… I don’t think it is outright prohibited, but there are concerns specifically related to UDAAP and fair lending that would need to be addressed. I would want to review the interagency overdraft guidance very carefully, especially related to ECOA and safety and soundness. Also, you should provide sufficient warning/notifications so the customer isn’t caught off guard and negatively impacted by funds being eliminated or reduced – I’d also suggest this be included in the initial disclosures like I’m sure you have language about the product being eliminated if used excessively. If you’re implementing this as a new policy, I’d suggest providing revised OD program disclosures. Also, you’d want to ensure consistent application (e.g. criteria for pgoram, recuction, etc. associated with the limits) and strictly adhere to is to ensure no fair lending concerns.

My main concern with the ones already lowered would be how/when were cusomters notified, did the action negatively affect the customer if sufficient notice wasn’t given, and could there be any fair lending issues? It’s a good idea to run a new policy, especially on a issue that regulators scrutinized so heavily, by examiners before implementing.

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