July 13, 2021

NAFCU offers Federal Reserve recommendations on account, payment service access

Federal ReserveNAFCU Senior Counsel for Research and Policy Andrew Morris Monday wrote to the Federal Reserve to offer the association's concerns and recommendations regarding a set of proposed guidelines the Federal Reserve Banks will use when evaluating requests for accounts and payments services.

In the letter, Morris underscored the importance of the Federal Reserve adopting a uniform and transparent framework for evaluating request for access to the Federal Reserve payment system. Morris also urged the Federal Reserve to ensure that non-federally-insured institutions meet the same safety and soundness standards applicable to insured institutions.

NAFCU has raised concerns about Fed access for fintech companies as they could pose risks to the financial system and offered support for the proposed principles that recognize the unique risks posed by fintechs and other nontraditional entities.

Morris also suggested the Federal Reserve Board should exercise heightened due diligence when evaluating requests from non-depository institutions engaged in novel financial activities.

In addition, Morris urged against promoting standards that would be more burdensome than what currently exist for credit unions seeking access to Fed services today. Morris stated the guidelines should not entail a more onerous standard for monitoring credit unions that currently have account and service access.

Read the full letter. For more on this topic, NAFCU previously sent members a Regulatory Alert breaking down the proposed guidelines.