Alert July 17, 2012

FDIC Issues Letter Cautioning Depository Institutions Against Passing On Fees to Customers as “Deposit Insurance Fees,” “FDIC Fees” or Other Similarly Described Fees

The FDIC issued a Financial Institution Letter (FIL-33-2012), the “Letter”) in which the FDIC discouraged insured depository institutions (“IDIs”) from passing on fees to customers as “deposit insurance fees,” “FDIC fees” or other similarly described fees.  The FDIC said in the Letter that while IDIs are not prohibited from passing on the costs of deposit insurance to customers, they should refrain from “specifically designating that a customer fee is for deposit insurance” and from stating or implying that the FDIC is charging such a fee [to the customer].  The FDIC further stated in the Letter that by passing on FDIC fees to customers, an IDI could violate the prohibition against disclosure of confidential examination and supervisory information, as the fees imposed by the FDIC reflect its risk-based supervisory evaluation of the applicable IDI.  Moreover, fees labeled as “FDIC fees” may be misleading if “they are not reasonably related to the proportional cost of deposit insurance allocable to a particular customer…”  Generally, IDIs that take steps to recoup the costs of deposit insurance impose such charges on business customers and do not charge the fees to consumer accounts.