As regulators work to implement new consumers protections from the Dodd-Frank Act, the majority (73%) of bank executives are confident that the creation of consumer protection agency will have an impact on their business according to a survey from Grant Thornton.
However, executives are not confident that the financial reform bill will be effective in detecting the broad risks to the financial system and preventing or reducing the threat of future taxpayer-funded bailout.
Nearly half (47%) of bankers believe the reform is not at all effective and an additional 52% feel it is somewhat effective. Only two percent say the reform is effective and no one says that it is “very effective.”
“Many of the rules under the Dodd-Frank Act have yet to be defined by regulators, which may account for the uncertainty and trepidation bankers feel about this legislation,” says Nichole Jordan, partner and sector leader of Grant Thornton’s Banking and Securities practice. “Although some financial institutions are beginning their compliance efforts now, the success of financial reform is something to be measured over the long term.”
Bankers also expressed concerned that interchange fees paid by merchants and retailers to banks that issue debit cards would be set by the Federal Reserve in an amount that is “reasonable and proportional” (71%). Only a small proportion of the bankers were concerned about the Volcker rule (3%) and regulation of derivatives (4%).
The bill provides the Consumer Protection Bureau the authority to enforce rules for financial products, including reverse mortgages. As part of the law, the agency is required to conduct a reverse mortgage study to determine any deceptive practices and see whether suitability standards are necessary.
It’s also required to determine whether additional safeguards are needed to protect consumers from being sold reverse mortgages to fund inappropriate annuities, investments, and other financial products. To view a copy of the report, see here.