Overdraft: Compliance Blog outlines risks, updates CUs on litigation
In response to an increase in questions from credit unions that have received notices related to overdraft class action lawsuits, NAFCU Vice President of Regulatory Compliance Brandy Bruyere provides some high level information to help credit unions analyze risks in today's Compliance Blog post.
In the blog, Bruyere notes that financial institutions have been facing class action claims related to overdraft programs for several years, highlighting that the claims often include a few elements:
- violations of Regulation E, even where a credit union utilized the rule's model form;
- assertions that the account agreement was violated when the account balance was calculated inappropriately and fees were assessed; and
- multiple state law claims.
"More recently, the Regulation E claims are not as frequently seen in these cases," writes Bruyere. "This may be in part because the Electronic Funds Transfer Act, which is implemented by Regulation E, only allows one year for bringing a claim to court."
Bruyere also gives an update on some pending lawsuits against credit unions and the success rate of motions to dismiss.
"Overall, when reviewing motions to dismiss in the light most favorable to the plaintiff, courts in multiple states have found some merit to claims that account agreements are ambiguous as to when overdraft or NSF fees will be assessed," Bruyere writes. "To mitigate future risk, many credit unions have already reviewed their account agreements and overdraft opt-in agreements with outside counsel, considering various court outcomes in the jurisdictions where they operate."
Bruyere points to articles in The NAFCU Journal and Compliance Monitor, as well a recent Compliance Blog post, as resources on the topic. For more on overdraft litigation, read Bruyere's blog. NAFCU's Compliance Team publishes a new blog every Monday, Wednesday, and Friday on key regulatory issues affecting credit unions. Sign up to receive new Compliance Blog posts.
Consumer Lending Accounts
Add to Calendar 2020-09-17 14:00:00 2020-09-17 14:00:00 NCUA’s Subordinated Debt: The Fundamentals and Strategy Having access to capital is incredibly important for any financial depository institution. NCUA has recognized this and as such proposed an amendment to authorize the issuance of subordinated debt by natural person credit unions for purposes of regulatory capital treatment. Currently only low-income credit unions may issue subordinated debt that can count toward their net worth requirement. The proposal allows complex credit unions and new credit unions this option, which will count toward their risk-based capital requirement. This webinar will cover NCUA’s proposal to authorize the issuance of subordinated debt, the process and its usefulness for managing liabilities and capital. It will address the: proposed rule, regulatory approval process, terms of the debt instrument, offering process and eligible investor, reasons to issue subordinated debt and current interest rate environment. Key Takeaways Understand the approval and offering processes Discuss identifying potential investors Review the supplemental capital’s role in longer-term strategic planning Learn the pros and cons and financial impacts of subordinated debt Register Now For On-Demand Access$295 Members | $395 Nonmembers (Additional $50 for CD)One registration gives your entire credit union access to the on-demand recording until September 17, 2021.Already registered? Go to the Online Training Center to view live. Who Should Attend? Chief Executive Officers (CEOs) Executive Vice Presidents (EVPs) Chief Financial Officers (CFOs) Education Credits NCCOs will receive 1.5 CEUs for participating in this webinar NCRMs will receive 1.5 CEUs for participating in this webinar. CPA credit information is below; recommended 1.5 CPE credits. CPA Certification Credit Information Reviewer: Josie Collins, Associate Director of Education, NAFCU Learning Objectives: Understand the approval and offering processes. Discuss identifying potential investors. Review the supplemental capital’s role in longer-term strategic planning. Learn the pros and cons and financial impacts of subordinated debt. Program Level: Basic Prerequisites Needed: None Advance Preparation Needed: None Delivery Method: Group Internet-Based Recommended CPE Credits: 1.5 credits Recommended Field of Study: Finance - Technical National Association of Federal Credit Unions (NAFCU) is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. Learn more. About Our Webinars Our webinars are streamed live from NAFCU headquarters near Washington, D.C. Your audio/video feed of the presenters includes presentation slides and downloadable handouts. You can easily submit your questions to the presenters at any time during the live broadcast, with no dialing over the phone! The audio and video stream directly through your computer. Web NAFCU email@example.com America/New_York public
Credits: NCCO, NCRM, CPE
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