NAFCU Compliance Blog

Remittance Transfer Final Rule; NAFCU Final Regulation

Written by Michael Coleman, Regulatory Compliance Counsel

On April 30th, the CFPB issued its latest final rule on remittance transfers. Most importantly, this final rule set the effective date of the remittance transfer final rule(s) as October 28th, 2013. Meaning, the entirety of the remittance transfer rule, including all of the previous final rules, are effective October 28th, 2013. 

This latest final rule also amended several other disclosure requirements and error resolution requirements from the previous remittance transfer final rule(s), here is an excerpt from the preamble: 

"The amendments address three specific issues. First, the 2013 Final Rule 
modifies the 2012 Final Rule to make optional, in certain circumstances, the requirement to 
disclose fees imposed by a designated recipient’s institution. Second and relatedly, the 2013 
Final Rule also makes optional the requirement to disclose taxes collected by a person other than 
the remittance transfer provider. In place of these two former requirements, the 2013 Final Rule 
requires disclaimers to be added to the rule’s disclosures indicating that the recipient may receive 
less than the disclosed total due to the fees and taxes for which disclosure is now optional. 
Finally, the 2013 Final Rule revises the error resolution provisions that apply when a remittance 
transfer is not delivered to a designated recipient because the sender provided incorrect or 
insufficient information, and, in particular, when a sender provides an incorrect account number
or recipient institution identifier that results in the transferred funds being deposited in the wrong 
account." 

As always, the best place to look for the nitty gritty details of these amendments is going to be the regulation itself, you can find the amended regulatory text here, and the amended official commentary here. This final rule has not been posted in the Federal Register yet, but when it has you should be able to find it as published in the Federal Register on the CFPB's webpage for the remittance transfer rule. Also, don't forget the categories listed on the right side of the blog, you can click "Remittances" to see all our recent posts on the topic, including this post which provides a nice list of resources on the remittance transfer final rules.  

NAFCU's Final Regulation on 2013 Remittances Final Rule. Confused yet? Don't worry, you are not alone, this rule has been an extremely difficult rulemaking process to follow. NAFCU’s Regulatory Affairs Team has prepared a Final Regulation, 13-EF-07, on the 2013 Remittances final rule. It is available for download here (NAFCU login required). Also, the Regulatory Affairs team is working on a comprehensive guide for all the remittance transfer final rules. Stay tuned. 

CFPB Expands Consumer Complaint Database Information; #Reputation Risk?

Written by Michael Coleman, Regulatory Compliance Counsel

We have blogged several times on the CFPB’s Consumer Complaint Database (and we even created a member complaints category for the blog) and its implications for credit unions, most recently, here. Initially, it is important to keep in mind that credit unions under $10 billion are not included in the Consumer Complaint Database.  The CFPB will forward any complaints from these credit unions to NCUA, and credit unions will need to follow NCUA's procedures for responding to member complaints, which we’ve outlined a couple of times on the blog.  Most recently here and here.

Well, the CFPB is at it again. On March 28^th, 2013 the CFPB announced in a press release and on its blog that they have expanded the consumer complaint database. The database now includes more than 90,000 complaints on mortgages, student loans, bank accounts and services, other consumer loans, and credit cards.

We have expressed our concern numerous times over the fact that the consumer complaint database contains unverified complaint information, and the danger that this poses to a credit union’s reputation risk in this age of viral media. Once that information is out there, you can’t un-ring that bell.

The CFPB acknowledges the fact that this data is unverified in a disclosure on the compliant database, but it doesn’t really jump off the page. Nor does their rationale for listing unverified data in their policy statement really resonate (see page 9), or the “significant controls” for verification in this policy statement on the release of credit card compliant data.  

Instead of beating that drum again, I’d like to focus on what I considered a particularly troubling excerpt from the CFPB announcement:

“A Call to Action

The CFPB is encouraging the public, including consumers, analysts, developers, data scientists, civic hackers, and companies that serve consumers, to analyze, augment, and build on the public database to develop ways for consumers to access the complaint data or mash it up with other public data sets.

The CFPB would like the public to highlight innovative uses of the data, from visualizations to new tools, by tweeting @CFPB using the hashtag #CFPBdata.”

Admittedly, I am what you might call technologically challenged (just ask any of my colleagues, if the printer is broken, its most likely my fault), and I have no idea how Twitter actually works. Still, I don’t know about you, but this makes my eyes start twitching and I want to employ Steve’s stress reduction kit. There is a great recap of “the new cycle” of regulation in this blog post, highlighting the fact that the solicitation of complaints can ultimately result in the passage of laws or the issuance of regulations that will apply to all credit unions, not just those over $10 billion in assets.

But the CFPB has taken it a step further. They are now asking the public, including “civic hackers,” to analyze and augment the data, or to “mash it up” with other public data sets. And then tweet it at “#CFPBdata.” To me, this just exacerbates the reputation risk issues associated with the consumer complaint database.

But wait, there’s more. On Thursday April 4^th, the CFPB announced in a blog post that they are now accepting complaints regarding remittance transfers:  

“Every complaint we receive helps us understand the challenges facing consumers, and they inform and shape our priorities.

Reading your complaints about money transfers will complement work we have already started in this area, including issuing a rule on international money transfers, which will include a new set of protections for consumers who send money internationally.”

As if the rulemaking process for the final rule on remittance transfers hasn’t been difficult enough already, the CFPB is now soliciting complaint data on remittances, and who knows where that will lead. To me, this feels like throwing gasoline on a wild fire. But I digress.

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Iceland Photos, Part 2. On a more cheerful (less rant-filled) note, I thought I’d share a couple more photos from my trip to Iceland. Have a great weekend!

My brother and I at Gullfoss.

 

Skógafoss!

Research Tip: Tracking Rulemakings in the Federal Register

Written by Steve Van Beek

We often get questions about the status of certain rulemakings.  For example:

• Has NCUA finalized their Emergency Liquidity proposal?

• Has the CFPB finalized (for the third time) the Remittance Transfer proposal?

• What about NCUA's CUSO proposal?

• Loan Participations?

You get the picture.  To help with this, we created a Pending Regulations Chart which can be found at the end of our Compliance Calendar.  You do not need to be a NAFCU member to view the Compliance Calendar; however, some of the linked resources are for members-only.  

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Federal Register.  There is also a great way to track the rulemakings in the Federal Register automatically.  You can subscribe to the topic "credit unions" to be sure you are emailed whenever a credit union-related rulemaking is published in the Federal Register.  This is especially important as - we are all aware - rulemakings impacting credit unions do not come from just NCUA.  Of course, this isn't a perfect science as some rules might not be coded with the "credit union" topic.  But, I've found it works pretty well.

To subscribe, start out be going to the "credit union" topic page.  Click the "Subscribe" button on the right-hand side.

From here, you'll get a pop-up box that you can enter your e-mail address (or subscribe via RSS feed).

You can choose to receive all "credit union" topics or only those labeled as "significant actions."  For me, I'm not one to trust the self-labeling of "significant" by the regulators - so I subscribe to the broader group.

Have a great week!

CFPB's Project Catalyst & Trial Disclosure Programs

Written by Steve Van Beek

Project Catalyst. The CFPB established Project Catalyst in order to foster "consumer-friendly innovation and entrepreneurship in markets for consumer financial products and services."  There is quite a bit of information on Project Catalyst here.

Unfortunately, there is a serious design flaw.  And, that is the existing regulations and the non-stop changes to them.  Credit unions and other providers of financial products and services are spending ever-increasing time and money keeping their existing products compliant that there is little or no time for innovation or entrepreneurship.  While Project Catalyst may end up being an avenue where innovators can work with the CFPB to have their products, services or approaches deemed compliant with the CFPB's interpretation of the regulations, I seriously doubt it will have a large impact for credit unions who are trying to weave through the complex maze of regulations to fill the demands of their members.  

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Trial Disclosure Program.  As part of Project Catalyst, the CFPB is allowing companies to run trial disclosure programs.  You can find the CFPB's press release of the this program here and their proposed policy here (NAFCU has a Regulatory Alert (13-EA-03) with additional details).     

In short, credit unions could design and test new disclosure documents - provided they receive approval up front from the CFPB.  The CFPB would give credit unions a safe harbor for compliance with the existing regulations as they test their new forms for consumer understanding, cost effectiveness and minimizing consumer harm.

Is your credit union likely to invest in a trial disclosure program?  Probably not.  There would be huge upfront costs to design a new disclosure and then you'd need to receive the CFPB's blessing.  Then, test the disclosures and share the results with the CFPB.  Hopefully, your new disclosures would help improve the existing requirements - but there would be no guarantee the CFPB would listen.

As mentioned above, credit unions are spending huge amounts of time and resources to comply with the existing regulations.  Developing their own disclosures isn't exactly on the top of the list.  

So, why I'm I spilling ink over this?  To demonstrate how backward the CFPB has the process.  The CFPB is the only entity with authority over the consumer regulations.  They also have a mandate to protect consumers and improve consumer understanding of disclosures.  So, they should be the ones creating multiple disclosure options and testing them with actual consumers in real-world situations.  Their Know Before You Owe program was similar but it included a shockingly low number of tests with consumers.  And, even worse, it hasn't been tested on any actual mortgage loans.  

If anyone is going to be creating numerous approaches to disclosures, it should be the CFPB.  And, they should partner with entities offering financial products and services to provide a safe harbor for using the CFPB's testing forms with real customers/members and the CFPB will get real feedback.

Example - Remittances.  If the CFPB had taken this approach with their remittance transfer regulation, they would have realized very early on that their approach to the regulation was going to be a huge headache for institutions who utilized an open network.  And, they would have been able to determine which disclosures were meaningful to consumers and which weren't.  That would have resulted in a better regulation in the end.  Instead, we've been through numerous ups and downs as the CFPB tries to adjust and amend a rule that was not initially designed with the real world in mind.

Resources for the CFPB's International Remittances Regulation

Written by Steve Van Beek

A Wild Ride.  The evolution of the CFPB's international remittances regulation has been confusing to everyone.  First, we had the rule proposed by the Federal Reserve.  Then, the CFPB took over on July 21, 2011.  The CFPB finalized the rule but also proposed amendments to the rule at the same time.  Then, realizing the rule was not workable, the CFPB issued a delay of the effective date while it proposed additional changes.  So, that is where we are - trying to figure out where we are at.  And, how your credit union will be able to comply.  The CFPB has indicated the new effective date will likely be 90 days after they finalize the latest proposed changes (although they are taking comments).  That doesn't leave much time if your CU has made a business decision to continue offering remittance transfers to your members.

Below are a variety of resources that may be helpful to understand the new requirements and what steps your credit union will need to take to comply.

• The CFPB's Main Remittance Regulation Webpage

• Small Entity Compliance Guide

• Safe Harbor Countries List

• The CFPB's October 2012 Webinar on the Remittances Rule (also available here)

• Presentation Slides from October 2012 Webinar

• CFPB Bulletin 2012-08 Announcing Delay of Implementation Date

• Proposal to Amend Certain Provisions of Remittance Rule (but not the 100 transaction safe harbor level)

NAFCU also has these resources available to NAFCU-member credit unions:

• Regulatory Alert on Latest Remittance Proposal (13-EA-01) - Covers the Latest Proposed Changes

• Final Regulation on Remittance Requirements (12-EF-10) - Covers the Rules after the Concurrent Proposal was Finalized

• Final Regulation on Remittance Requirements (12-EF-02) - Covers the First Remittance Regulation Finalized by the CFPB

Throughout the process NAFCU has sent numerous comment letters to the CFPB on the remittance requirements.  Recently, we sent a letter urging the CFPB to further delay the requirements to ensure the rules do not unnecessarily burden credit unions trying to comply:

“First, NAFCU requests that the CFPB further extend the 90-day delay of the effective date to allow credit unions sufficient time to comply with the proposed rule and to make the required disclosures of fees, taxes, and exchange rates. Second, NAFCU continues to believe that the CFPB should exempt federally regulated credit unions, or, alternatively, small entities consistent with the Small Business Regulatory Enforcement Fairness Act, from the purview of the final remittance transfer rule. The regulatory burden that the remittance transfer rule places on credit unions will lead to a significant reduction in consumers’ access to remittance transfer services. Many credit unions already facing an enormous compliance burden have or will be forced to discontinue their remittance programs, and those that continue to offer remittances will be forced to significantly increase their members' fees.  

Further, NAFCU would like to reiterate the necessity for the CFPB to respond to credit union concerns during the rulemaking process, rather than implementing remedial measures after the fact. Although NAFCU appreciates the CFPB’s responsiveness to reconsider the remittance rule, proactive efforts by the CFPB to address potential problems and reduce the future compliance costs and regulatory difficulties faced by credit unions would be far more effective when conducted prior to and during the rulemaking process.”  (Emphasis added).

The last paragraph is especially important.  The process this regulation has taken has left everyone's head spinning.  The CFPB had opportunities to listen to industry feedback and make changes upfront.  Instead, they finalized the rules and only then did they realize they were not workable.  Unfortunately, the lack of operational experience and background at the CFPB was on full display.  They had a rule and were going to finalize it no matter what the consequences.  

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NAFCU Remittances Webcast Today.  We also have a webcast on the Remittances Webcast today at 2:00 p.m. EST.  Be sure to tune in.  We've extended the early-bird deadline indefinitely, so you can purchase the webcast at any time (including after today) at the early-bird price.  To learn more about the webcast, click here.  

Economic Census Forms; Upcoming Webinars & Webcasts

Written by Steve Van Beek

Economic Census.  Your credit union may have gotten an Economic Census form (the forms were sent between October and December).  The deadline for completion is February 12th.  To help facilitate understanding of this form and the requirement, the Office of Business Liaison at the Department of Commerce has put together information, numerous FAQs and is hosting a webinar on Wednesday, January 24th at 1:00 p.m. EST.  Note: There was a prior webinar on October 11th, 2012.  The slides from that presentation are here (very large PPT file) and a transcript is available here.

There are additional help resources available here.  

The FAQs include specific information for different industries - including credit unions.  The credit union FAQs are here and forms are here.  Remember, the deadline is February 12th, 2013.  

Note:  Not every credit union will receive a form.  But, be sure to check with folks and see if your CU has and make sure it is completed by February 12th. 

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There are also numerous other webinars and webcasts this week.  

NCUA Webinar on Serving Low-Income Members.  NCUA is hosting a free webinar on Strategic Issues for Servicing Low-Income Members.  This webinar is Wednesday, January 23rd at 2 p.m. EST.  If your credit union recently received your low-income designation, this might be a useful webinar.  Here is from the announcement:

"Staff from [NCUA's] OSCUI and NCUA’s Office of Consumer Protection will discuss ways low-income designated credit unions may improve and increase service to low-income members. In addition, the staff will present sample products and services designed to meet the needs of these members."

You can register here. 

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NCUA HMDA Webinar.  NCUA will also be offering a free webinar entitled HMDA: Accuracy and Timeliness.

The webinar will be Thursday, January 24th at 2 p.m. EST.  You can register for the webinar here and you can also send any questions to webinarquestions@ncua.gov.  

NCUA also recently issued Regulatory Alert 13-2 which highlights the March 1, 2013 deadline for submitting HMDA data.  Earlier, they had sent Regulatory Alert 13-1 which discusses the $42 million asset threshold for 2013 HMDA reporting.

Does anyone know how these Regulatory Alerts are delivered?  Why don't they go through NCUA Express?  Another one they buried on their website was Regulatory Alert 12-4 on the CFPB's Remittance Rule. 

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Upcoming NAFCU Webcasts.  NAFCU will be offering a very full slate of webcasts in 2013.  And, you can be assured that quite a few will be focusing on compliance - especially the new mortgage requirements.  Below are our next couple webcasts:

• The CFPB's International Remittance Transfer Disclosure Rules - Thursday, January 24th from 2:00 - 3:30 p.m. EST.  Mary Lou Heighes will walk attendees through the final rule as well as aspects of the proposed rule that you need to know.  Mary-Lou has been very involved in the remittance transfer rule from the start and gave a great presentation at our Compliance Seminar in October.  And, because of the importance of this rule - we are extending the early-bird registration price indefinitely.  You can sign-up for this webcast any time and receive the early-bird price.  

Remember: All of NAFCU's webcasts are available on-demand as well.  If you can't make the live webcast (perhaps because you need to watch the HMDA webinar or the Census webinar live), you can always watch the on-demand webcast at a later date.

• Top HR Compliance Issues Affecting Credit Unions in 2013 - Wednesday, February 6th from 2:00 - 3:30 p.m. EST.  Margaret Fiester from the Society of Human Resource Management (SHRM) will discuss how credit unions will be impacted by various future reforms - including tax reform and health care reform.  Register by January 30th to Save $100.  

NCCOs:  Both of the webcasts above will earn credits toward renewing your NAFCU Certified Compliance Officer (NCCO) designation.  If you see this logo -  - you'll be sure the webcast will be offering NCCO credits.

New NCCO Affidavit Process:  We also have a new, streamlined NCCO affidavit.  You can find the fillable-form located here.  If you are an NCCO and attend a NAFCU webcast with this symbol -   - be sure to use this form.   

CFPB Extends Remittances Effective Date - New Proposal Coming Soon

Written by Steve Van Beek

Earlier this afternoon, the CFPB issued Bulletin 2012-08 on the remittance transfer requirements under Regulation E:

"The Consumer Financial Protection Bureau (CFPB or the Bureau) expects to issue a proposal next month to refine three elements of its rule regarding foreign remittance transfers.  The proposal will be narrowly targeted to address the rule’s provisions on: (1) errors resulting from incorrect account numbers provided by senders of remittance transfers; (2) the disclosure of certain foreign taxes and third-party fees; and (3) the disclosure of sub-national, foreign taxes.  The Bureau will proceed on a fast track with a notice of proposed rulemaking, which will propose these changes. This notice will propose to amend the final rule issued earlier this year, currently set to take effect on February 7, 2013.  The notice will also propose a brief extension of the effective date of the rule until 90 days after the Bureau finalizes the proposal. The Bureau anticipates providing this extension in order to permit providers to adjust their systems in response to the proposed requirements.  The Bureau expects that the proposed effective date will be sometime during the spring of 2013." 

In short, the CFPB will be proposing changes to certain parts of the remittances rule (although it doesn't appear to be considering an increase in the 100 safe harbor level) and this proposal will also extend the effective date of the rule.  

The CFPB's Bulletin indicates it will fast-track the proposal and final rule and that the new effective date will be later in the Spring 2013.  For additional information, be sure to review the proposed rule when it is issued.  The CFPB also has a remittances page - including a PDF document with the full regulation and staff commentary - which might be useful. 

CFPB Report on Private Student Loans; CFPB Remittances Webinar; NAFCU's Offices Closed

Written by Steve Van Beek

We'll keep this blog post brief as we’ll have additional information on the CFPB reports in future blog posts.

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Private Student Loan Report.  On October 16th, the CFPB issued a report on private student loans.  Here is from the press release:

"Today’s report, which was mandated by Congress, analyzed approximately 2,900 private student loan complaints, comments, and other submissions and input from borrowers. The report found that roughly 95 percent of the complaints are about loan servicing – when borrowers try to pay back their debt or are unable to pay."

The report is available here.  A fact sheet is available here.   

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Student Loans and Servicemembers.  On October 18th, the CFPB issued a report on student loans and servicemembers.  Prominent in the report were discusses of student loans and the SCRA:

"Many servicemembers navigate hurdles that may be unnecessary in order to receive the SCRA interest rate cap. Once a borrower has qualified for this interest-rate cap, the SCRA requires the servicer to continue to provide this benefit for the duration of the servicemember’s time on active duty, as reflected in the servicemember’s orders. We have received complaints from servicemembers, on active duty for multiple years, who reported that they were told that their interest-rate cap would expire annually, and were subsequently required to submit  additional orders in order to retain this benefit."

The report is available here.  The CFPB also released a Guide for Servicemembers with Student Loans.  

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CFPB Remittances Webinar.  If you missed the CFPB's webinar on remittances, you can view the archive here (slides are here).  The Small Entity Compliance Guide is also available.

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NAFCU Closed.  NAFCU follows the Federal Government Operating Status and our offices will be closed today due to Hurricane Sandy.  NAFCU Members:  If you have compliance questions, please email us at compliance@nafcu.org.  If you call, please leave a voicemail and we'll get back to you as soon as we can.   

For those in and around the Hurricane area, be safe!

Remittances Webinar; Fair Lending Webinar; Archived Nonaccrual/TDR Webinar

Written by Steve Van Beek

Remittances.  The CFPB recently opened their Remittances Webinar to everyone - without the need to register (the webinar is free).  The webinar will be available on this page beginning at 2:30 p.m. Eastern.  The webinar will last 90 minutes.

That is TODAY at 2:30 p.m. Eastern.  Be sure to tune in.    

NOTE - The CFPB issued their small entity compliance guide yesterday.  

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Fair Lending.  The Philadelphia Federal Reserve's Consumer Compliance Outlook will be hosting a Fair Lending Webinar tomorrow - October 17th from 2:00 - 3:30 p.m. Eastern.  You can register here.   

The presentation slides are already available here.  Topics to be discussed are:

• Recent Fair Lending Enforcement Actions
• Risk Assessments
• Fair Lending Compliance Management
• Data Reporting and Analysis
• FHA LGBT Rule, Disability Discrimination, Maternity Leave Discrimination
• Loss Mitigation and Loan Modification
• Redlining

Remember - TOMORROW at 2:00 p.m. Eastern.  Register here.   

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Nonaccrual and TDR Webinar.  NCUA's webinar on Workouts, Nonaccrual and TDRs is now archived and available.  The webinar can be watched here.  A transcript is also available inside the webinar (or at this link).       

Upcoming Webinars and Webcasts; NAFCU's October Compliance Monitor

Written by Steve Van Beek

Webinars and Webcasts.  There are quite a few free webinars to keep on your radar:

• October 4 at 3:00 p.m. EDT - Town Hall with Chairman Matz - Registration is Still Open

• October 16 at 2:30 p.m. EDT - New Requirements for Remittance Transfer Providers - Sign-Up by sending an email to CFPB_RemittanceRule@cfpb.gov by October 9.  If you have a question you'd like answered during the webinar - send it to CFPB_RemittanceRule@cfpb.gov by October 5.  

• October 17 at 2:00 p.m. EDT - Fair Lending Hot Topics by the Philadelphia Federal Reserve's Consumer Compliance Outlook

• Archived:  Servicemember Financial Protection (Compliance with the SCRA) - Slides are here.

NAFCU also has a couple of upcoming webcasts that might be of interest:

• October 10 - BSA/OFAC for Directors and Supervisory Committee  - Keep in mind that you can watch the archived webcast for up to one year - making this perfect for a future Board meeting or training event.  Sign up by October 3 and Save $100.  

• October 24 - Social Media and Website Compliance - This webcast will also be viewed live by all Regulatory Compliance Seminar attendees.  Sign up by October 17 and Save $100.  

• November 7 - CFPB's Latest Mortgage Proposals - NAFCU's Compliance team will overview the mortgage loan originator proposal, interagency higher-risk appraisal proposal and the Regulation B appraisal proposal.  Sign up by October 31 and Save $100.    

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NAFCU's October Compliance Monitor.  NAFCU Members: Our October Compliance Monitor is now available for download.  This issue includes lengthy articles on the "high-cost" mortgage proposal (including a discussion of the potential change to the definition of "finance charge") and the CFPB's mortgage servicing proposals.  We've also attached a six-page chart which helps organize the 20 new notices included in the mortgage servicing proposals.  Happy reading!