Marianne Lake, head of Chase Bank, a division of JPMorgan Chase & Co. (NYSE: JPM), has issued a warning to its 86 million customers: prepare for potential new charges on their bank accounts.
Lake highlighted that proposed regulations aimed at capping overdrafts and late fees will lead to significant cost increases for everyday banking services.
Chase, the largest consumer bank and one of the top credit card issuers in the country, plans to pass on the costs of these higher regulations to its customers.
Lake mentioned that currently free services such as checking accounts and wealth management tools could soon incur fees. "The changes will be broad, sweeping, and significant," she emphasized, noting that those most affected will be individuals who can least afford the additional expenses.
The proposed regulations, spearheaded by the Consumer Financial Protection Bureau, include a $8 cap on credit card late payment fees and a $3 cap on overdraft charges.
Additionally, the Wall Street Journal report adds there are plans to limit debit card fees and charges to software companies like Venmo and CashApp for accessing customer data.
New capital rules could also make lending harder for banks, requiring them to hold more reserves against mortgages and credit card loans.
Some consumer advocates argue this scenario mirrors the post-financial crisis era when banks threatened to impose fees following regulatory caps but refrained mainly due to consumer backlash.
However, banks now assert that the scope of the new regulations could force them to implement these charges.
Lake foresees that the range of free services, such as credit score trackers and financial planning tools, may not remain free if the rules are enforced.
She pointed out how previous regulations on debit card swipe fees had already increased costs for consumers and anticipates a similar outcome with the new regulations.
Citing a consulting partner at PricewaterhouseCoopers, the WSJ report adds while large banks might absorb the impact through their wealth management and investment banking divisions, smaller banks could struggle.
He also warned that the competitive environment for retail deposits could force banks to keep services free to retain customers.