Industry Letter

September 11, 2023

To: All New York State-Regulated Banks, Credit Unions, Trust Companies, and FDIC-Insured Branches of Foreign Banking Corporations

Re: Notice on Promoting Basic Banking Accounts

The New York State Department of Financial Services (“Department” or “DFS”), is committed to protecting consumers and to ensuring that banking and other financial services are available and affordable to all New Yorkers, including underserved communities such as lower- and middle-income households, foreign-born residents, and individuals of color.

This letter follows the release in May of the Department’s report, Access to Financial Services in New York, A Report on Unbanked and Underbanked Communities and Households in New York, Pursuant to Chapter 183 of the Laws of 2022, which found that access to affordable bank accounts—and in particular accounts that eliminate overdraft, account activation, and low-balance fees—remains an issue for many consumers.  Based on continued conversations with elected officials, advocates, and consumers, the Department is issuing this notice to encourage banks to improve the promotion of these accounts to New Yorkers.

In 1994, New York enacted the Basic Banking services law, codified in Section 14-f of the New York Banking Law.  This law requires all New York-regulated banking institutions (“Banking Institutions”), as defined under Section 14-f.9(a) of the New York Banking Law, to offer lower-cost basic banking accounts or alternative accounts “determined by the superintendent to be at least as advantageous to consumers as the basic banking account.”

While DFS regularly examines Banking Institutions for compliance with Basic Banking requirements, the Department is committed to identifying measures to expand access to affordable banking services.  As part of this effort, on April 15, 2022, I issued an Industry Letter—Offering Bank On Accounts as an Alternative to New York Basic Banking Accounts—determining that Banking Institutions that comply with the requirements of the account standards maintained by Bank On¹ and obtain certification of that compliance will be deemed to satisfy New York Basic Banking requirements.  Consequently, New York-regulated institutions are now able to offer Bank On accounts, similar to national banks, in satisfaction of the New York Basic Banking requirements.  In the 16 months following issuance of that Industry Letter, 23 New York-chartered Banking Institutions have begun offering Bank On accounts.

I am writing today to reiterate the Department’s commitment to ensuring that affordable bank accounts are available to all New Yorkers and that all Banking Institutions are taking necessary steps to promote these accounts.  Section 14-f.8(a) of the New York Banking Law sets forth minimum requirements for the promotion of Basic Banking accounts, namely:

Where a banking institution posts in the public area of its offices notice of the availability of its other consumer transaction accounts, it shall also post equally conspicuous notice in such public areas and in the same manner the availability of its basic banking accounts. Where a banking institution makes available in such public areas material describing the terms of its other consumer transaction accounts, it shall also make comparable descriptive material available in the same such areas and in the same manner for its basic banking account.

To ensure that Basic Banking accounts are sufficiently promoted to consumers, no matter where and how consumers engage with a Banking Institution, the Department urges Banking Institutions to adopt the following best practices, in order to increase access to banking services for all:

• Training, on an annual basis, of all consumer-facing staff with respect to the institution’s Basic Banking accounts and related materials and requiring staff to review the institution’s Basic Banking accounts and public materials with every customer inquiring about opening an account.
• Making information regarding the institution’s Basic Banking accounts easily accessible from their main homepage and making clear the terms of the Basic Banking account as compared to the terms of their other consumer accounts. 

In furtherance of the Department’s commitment to ensuring easy access to affordable banking services for New York consumers, I request that all Banking Institutions in receipt of this letter send the permanent direct hyperlink to their banking product(s) that satisfy the New York Basic Banking requirements.  Please send this information via email to [email protected] no later than close of business on Friday, September 22.

If you have any questions, please contact your primary point-of-contact at the Department.

Sincerely,

Adrienne A. Harris, Superintendent
New York State Department of Financial Services

¹ The Bank On national initiative is led by the Cities for Financial Empowerment Fund.  As noted in our 2022 Industry Letter, because the Bank On National Standards are subject to change without input from the Department, Banking Institutions that choose to offer Bank On accounts in satisfaction of their Basic Banking requirements should follow the Bank On National Account Standards, as may be updated from time to time.  The standards for 2023 – 2024 can be found at https://bankon.wpenginepowered.com/wp-content/uploads/2022/08/Bank-On-National-Account-Standards-2023-2024.pdf.