August 03, 2018

NAFCU recommends flexible PALs parameters

NCUA headquarters"Access to safe and affordable lending options is a necessity, and given the current options available, the need for greater innovation and expansion of product availability has never been more paramount," wrote NAFCU Regulatory Affairs Counsel Kaley Schafer as the association offered feedback Thursday on the NCUA's proposed payday alternative loans (PALs) program changes.

The NCUA in May issued a proposed rulemaking to provide federal credit unions with an additional option under PALs. PALs II would not replace the current PALs rule, but would be an alternative option that features higher loan amounts, longer loan terms and less strict membership requirements. The NCUA also left open the option for PALs III, which could include different fee structures, loan features, maturities and loan amounts.

While most credit unions are supportive of a less restrictive PALs option, Schafer reiterated that the parameters should be flexible so that credit unions can develop a PALs option that best fits their members' needs.

NAFCU has long advocated for additional mechanisms to allow credit unions to provide more small-dollar loans to members in need, and also hosted a small-dollar lending working group to explore additional small dollar lending options for credit unions.

Read NAFCU's detailed recommendations here.