Regulators have ordered MetaBank, a subsidiary of Meta Financial, to get regulatory approval before offering a wide range of credit products, including income tax refund application loans and assisted tax refund transfers. In a statement filed with the SEC, however, the company it expected to continue its relationships with third parties although it cannot ascertain any expected adverse impact on its lending businesses. The bank was also hammered by the Office of Thrift Supervision for engaging in unfair or deceptive practices and ordered to immediately discontinue its iAdvance program.
Income tax products were only one area for which Meta must receive written approval from the OTS regional director, before offering loans and credit. The director must also consent to third-party agreements regarding credit and deposit products, automatic teller machines, and any amendment to existing agreements. The stipulation extended towards any RALs or other loans where an expected tax refund is the expected source of loan repayment, including assisted transfers.
MetaBank provided funding for assisted transfers that were marketed during the past tax season by Santa Barbara Tax Products Group, itself formed after regulators ordered the Santa Barbara Bank & Trust to dump its RAL business. SBTPG did not offer RALs during the 2010 tax season, but its website has featured enrollment information for the RAL program for the 2011 tax season during much of the year.
The OTS based its directive on an examination of the bank and on an assessment of its third-party relationship risk, enterprise risk management and rapid growth through its Meta Payment Systems division.
The iAdvance loan is an open-end line of credit which the bank site warned was expensive and not suited for long-term borrowing. A note on the bank's site informed customers thatas a result of the OTS action they will no longer be able to uses iAdvfance.
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards. Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that. A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
