January 21, 2015
The Consumer Financial Protection Bureau recently proposed a system that would help academic institutions enjoy greater visibility into the products and services that banks are offering students, according to a statement released Jan. 14.
The government agency is looking to shed light on these companies' offerings at a time when schools and organizations are not required to disclose the partnerships they make to offer products such as debit cards, mobile banking and prepaid cards, American Banker reported.
By enhancing transparency, the government agency aims to assist schools so they only work with organizations that provide good deals. Academic institutions already compare different financial firms when considering which companies they will use to offer products and services to their students.
Request for comment
The government agency requested comment from the public on this draft version of the Safe Student Account Scorecard, indicating that it desired the feedback of various parties, including students, organizations representing these individuals, financial institutions and organizations that provide financial aid disbursement services.
These industry participants, account holders, service providers and consumer representatives have until March 16 to supply their input. In gathering this information and working on its proposal, the CFPB wants to not only promote enhanced transparency, but also level the playing field between different financial institutions offering products and services to students.
To help bring about these changes, the government agency has proposed including the following key information on scorecards:
By providing greater visibility on this information, the CFPB wants to help students get the best deals possible, Director Richard Cordray stated during a conference call Jan. 14, according to American Banker.
On the other hand, financial institutions that provide products and services to schools will need to disclose greater detail on their dealings with this customer base than they did before. This burden could prove cumbersome at a time when banks are already coping with a complex framework of rules and regulations.