May 22, 2017

NAFCU raises concerns about CFPB remittance rule

NAFCU Regulatory Affairs Counsel Ann Kossachev raised concerns about the CFPB remittance transfer rule's negative effects on credit unions and urged that the industry be exempted from the rule in a letter Monday.

"The cost to consumers has increased as a result of the rule and consumers are more confused about the entire process now than they were before implementation of the rule," Kossachev wrote. "Numerous credit unions have been forced to stop offering remittance transfer services because the compliance burden is simply too high … With fewer credit unions continuing to provide such services, consumers' options and ability to shop are severely limited.

"Of those credit unions that do still offer remittance services, many have expressed frustration because their members are deeply dissatisfied with the remittance process, in particular, the disclosure requirements," she continued.

Kossachev wrote in response to the bureau's review of the rule, which the bureau must conduct within five years of the rule's effective date because of its classification as "significant" under Section 1022(d) of the Dodd-Frank Act.

The CFPB is assessing whether the market for remittances has evolved since the rule was finalized and if the new system has created more transparency and price predictability. The bureau plans to issue an assessment report by Oct. 28, 2018.

During CFPB Director Richard Cordray's testimony before the House Financial Services Committee in April, he was questioned on the remittance rules multiple times. Rep. Andy Barr, R-Ky., used the example of NAFCU member Fort Knox Federal Credit Union having to stop offering remittance products because of the compliance burden.

Credit unions' concerns about the rules were also echoed by Rep. Nydia Velázquez, D-N.Y., who said credit unions in her district are finding it "increasingly difficult" to provide the service. Cordray said, "There may be more we can do on that front and that's something we're going to look at."