Aug. 8, 2012 – Credit unions that handle no more than 100 remittances in a year will have a safe harbor from new disclosure and other requirements under a Consumer Financial Protection Bureau final rule that takes effect Feb. 7.
The bureau announced the final rule
Tuesday afternoon. CFPB Director Richard Cordray put a call in to NAFCU President and CEO Fred Becker in advance of Tuesday’s announcement to let him know of the change from the proposed rule.
Carrie Hunt, NAFCU’s general counsel and vice president of regulatory affairs, said the revision announced Tuesday “may provide a small measure of relief for some credit unions,” though other concerns remain.
“The CFPB said it expects the rule to exempt 80-90 percent of credit unions from the new requirements,” Hunt said. “However, we are still concerned with the CFPB’s rationale for the exemption, as it factors in only the number of transactions handled and not the size of institutions affected.
“This cap works fine for that first 100 remittances, but not the 101st. For some credit unions, this is just not workable,” she said.
The remittance provisions are part of Regulation E, which implements the Electronic Funds Transfer Act.
The CFPB received this and other consumer financial services rules from the Federal Reserve and other regulators last year under the Dodd-Frank Act. The bureau issued an interim Reg E shortly afterward that closely tracked a previous Fed proposal. It also invited comments on a proposal focusing on preauthorized remittance transfers. The proposal applied the new requirements to institutions handling more than 25 remittances a year.
NAFCU has testified before Congress and communicated numerous times – in discussions and in comment letters – about the regulatory burden arising for small credit unions that handle few remittances but more than 25 each year.Lynette Smith
, president and CEO of Washington Gas Light FCU of Springfield, Va., told a House Financial Services subcommittee last month that her institution, which handles about three remittances a month, would probably have to stop handling any under the CFPB proposal.
The CFPB says the safe harbor will apply in any calendar year in which an institution handles only up to 100 remittances; it does not apply in years when that number is exceeded.
NAFCU is preparing a Final Regulation for its members.