Santander bank reaches pact over 'unbanked'
Santander Bank plans to announce on Friday that it will loosen standards nationwide for rejecting applicants seeking to open checking and savings accounts.
The change, to be announced as part of an agreement with New York Attorney General Eric Schneiderman, comes amid growing concern by regulators and consumer advocates that overly stringent screening by banks in the wake of the financial crisis has led to a rising number of Americans without basic banking services, like a checking account.
As part of the agreement, Santander will loosen its screening tied to ChexSystems, a consumer-reporting agency that helps banks screen for fraud, but which has been used in recent years to flag for more minor infractions, such as an overdraft or bounced check.
The use of ChexSystems in this way has led to complaints that seemingly minor slip-ups, such as a bounced check, have resulted in consumers' accounts being shuttered, followed by rejections from other banks when applying to open new accounts.
"No one should be denied a bank account because of a bounced check from years ago," said Schneiderman, adding that such screening affects more low-income households and has impacted New York more than other states.
Santander, which boasts 700 branches in states including Connecticut, Delaware, Maryland and New Jersey, has agreed to apply the new standards nationwide, according to officials from both the AG's office and Santander. The change will take effect at the end of September, according to a copy of the agreement obtained by Paste BN.
Schneiderman has been investigating the issue of banks using ChexSystems to screen out all but the safest banking clients since 2013. He has sent subpoenas to six banks, including JPMorgan, Wells Fargo and Bank of America, according to reports.
Santander is the third bank to come to an agreement about ChexSystems with Schneiderman followed by Citigroup in January and Capital One Financial in June 2014.
Although Santander will continue screening customers for past fraud, it will largely eliminate a measure of account suitability known as "account-abuse" screening. As such, applicants should no longer be rejected for "isolated or minor banking errors, such as paid debts or a small overcharge," according to Schneiderman.
"We are pleased to have reached an agreement with the attorney general's office," said Maria Tedesco, managing director of retail banking for Santander Bank. "We believe this change to the screening process for new account openings will make it easier for consumers who might have been denied services based on their banking history the ability to open checking or savings accounts at Santander."
Santander also committed $500,000 to publicize the goals of its agreement with the attorney general in low-to-moderate income neighborhoods in New York.