Answer:
Answer by Andy Zavoina:
I know of no prohibition for this, although I would see it as a marketing disadvantage and it would seem to send the wrong signal. But that is a personal view.
I would stay far away from charging an FDIC fee, disclosed that way, for insurance that is not provided. That is, if the customer exceeds coverage and you charge for it, a whole new problem is created.
Answer:
Answer by Mary Beth Guard:
I agree with Andy that this fee would place you at a competitive disadvantage since it would stick out like a sore thumb and all your competitors could tell customers, "We don't charge you for FDIC insurance coverage like the other bank does." Plus, the potential for the customer being misled is simply too great if you're charging for deposits that exceed coverage limits. Let's say the customer's average balance is $125,000 and you charge him an "FDIC insurance fee" that you have disclosed to be calculated at $.05 per $1,000 of average balance. This would lead the customer to believe that the entire $125,000 is covered, since he is being assessed an "insurance fee" for all of it. You could be faced with an unfair and deceptive trade practices suit. The fee income here is not worth the risk, in my view.
First published on BankersOnline.com 1/7/02
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