NAFCU Compliance Blog

CFPB Looking at Prepaid Cards; ERM and CFPB Webcasts; 2012 Seminar

Written by Steve Van Beek

Prepaid Cards Field Hearing.  The CFPB recently announced a field hearing on prepaid cards - which will be held today in Durham, North Carolina starting at 12:00 p.m. EDT.  The CFPB's blog indicates to check back if you want to view the live broadcast.  [As of now, there is no link to the feed.  But, past live feeds were available here if you want to try around noon]. 

Upcoming Prepaid Card Regulation.  In conjunction with today's field hearing, the CFPB announced its intent to regulate the prepaid card market.  The CFPB announced an Advanced Notice of Proposed Rulemaking (ANPR) which is an initial step in the rulemaking process and is usually one where an agency gathers information about the market - prepaid cards in this situation - in anticipation of future regulation.  

In addition to the ANPR, the CFPB issued a Fact Sheet on Prepaid Cards and a Ask CFPB: Prepaid Cards search function on their website.   

By the way - it is good to see the CFPB's website is capable of having a search bar!  I can't wait until they upgrade to the third version of their website and provide a search bar to help credit unions and other entities find the information they need.  

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NAFCU Webcasts.  NAFCU has a full slate of webcasts for June.  Remember, all of NAFCU's events and conferences are open to anyone - this includes webcasts.  

• June 13 - Building an Effective Enterprise Risk Management Program
• June 20 - The Impact, Expectations and Future of the CFPB on Credit Unions
• June 27 - BSA for Experts - Registration available soon!

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Regulatory Compliance Seminar.  Also, don't forget to look at NAFCU's 2012 Regulatory Compliance Seminar in Seattle, Washington.  Save $100 when you register by August 31st!  For potential topics, check out this past blog post.

Compliance Resources: Newsletters; Webinars; Webcasts

Written by Steve Van Beek

Today's post seeks to aggregate some useful compliance resources. 

NCUA Listening Session.  The first of NCUA's six listening sessions is today in Boston.  Registration for all sessions is now available here.  

NAFCU Members.  The May 2012 NAFCU Compliance Monitor is now available.  This month the articles look at the CFPB's movements in mortgage servicing as well as third-party service providers.  For those who missed the April 2012 BSA Blast, it is available here.    

Both the Compliance Monitor and the BSA Blast are NAFCU-member publications.  If your credit union is interested in NAFCU membership, check out our trial membership program.  Additional member benefits are discussed here.  

If you are a NAFCU-member and would like to be added to the Compliance Monitor and BSA Blast email notification lists, just send us an email - compliance@nafcu.org.  

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Vendor Risk Management Webinar.  The Philadelphia Federal Reserve is hosting a free Risk Management Webinar today at 2:00 Eastern.  The slides are already up and available here.  

FinCEN Webinar.  FinCEN will be hosting a free May 8th webinar discussing the technical specifications of the new SAR, CTR and DOEP forms.  Registration is here.   

Note:  This webinar promises to be very, very technical and geared toward IT folks.  Be sure to pass this along to anyone at your CU who fits the bill.  FinCEN will be conducting a future webinar for compliance professionals. 

CU Online Upgrade Webinar.  NCUA recently announced an upcoming upgrade to CU Online.  The upgrade is scheduled for May 28th and NCUA is hosting a free May 15th webinar discussing the upgrade.  Registration is here.  

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NAFCU Webcasts.  We also have a series of upcoming webcasts that might be of interest:

• May 9th:  Essential Financial Literacy Education (Sign up today and save $100)
• May 17th:  IRA Compliance: Managing a Successful IRA Program
• May 24th:  An Inside Look at NCUA's Interest Rate Risk Rule

Remember, all NAFCU webcasts are available for one-year after the purchase date and can be viewed numerous times.  The Financial Literacy webcast is a good example.  Not many credit union Boards meet at 2:00 p.m. on a Wednesday - but your credit union can use the webcast at a Board meeting or training session by accessing the "on-demand" version. 

All NAFCU webcasts are listed here (both upcoming live webcasts and on-demand webcasts).  

Member Complaints; NAFCU's 2012 Regulatory Compliance Seminar

Written by Steve Van Beek

Consumer and member complaints are at the forefront of quite a few conversations right now (including quite a few news articles).  The CFPB's promotion of their complaint process is one reason for this uptick in discussion as is the centralized complaint process for financial products.  

The CFPB issued their 2011 Annual Report on Consumer Complaints and it is full of useful information to review.  Here is a snapshot of the results:

"Between July 21 and December 31, 2011 the CFPB received 13,210 consumer complaints, including 9,307 credit card complaints and 2,326 mortgage complaints.

Forty-four percent of all complaints were submitted through the CFPB's website and 14.7 percent via telephone calls.  Referrals from other regulators accounted for 34.9 percent of all complaints received.  The rest were submitted by mail, email, and fax."

Future reports will include even more details - including complaints in new areas such as private student loans, auto loans and checking accounts.  Be sure to review the full report or pass it along to the appropriate person at your credit union.   

NCUA.  The March 2012 edition of the NCUA Report also included an article on Trends in Member Complaints and Consumer Inquiries.  Of note, the article indicates that of the complaints received in 2011 less than 1 percent involved a consumer compliance violation.  Of that 1 percent, half of those were related to timing issues related to the error resolution process under Regulation E.  

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NAFCU Regulatory Compliance Seminar.  October seems like a long way off but it will be here before you know it.  We are in the process of putting together the content and agenda - so please feel free to send in any comments, ideas or suggestions.  We love your input and this conference is really about you all so let us know what you need.

Here is what we are tentatively looking at so far (topics are subject to change, of course):

• TILA/RESPA Mortgage Disclosures
• Upcoming Mortgage Servicing Requirements
• The Latest on Overdraft Protection
• Remittance Transfers under Regulation E
• CUSOs
• Loan Participations
• Bank Secrecy Act Changes
• Social Media
• NCUA Update
• CFPB Update

I think that is a pretty good start - but let us know what you are looking for and how we can make NAFCU's 2012 Regulatory Compliance Seminar even better than the past.  

Recertification for NCCOs.  Remember, attending Regulatory Compliance Seminar is the best way to recertify your NAFCU Certified Compliance Officer (NCCO) designation.  Seminar offers 24 CEUs which is enough to fully recertify for two years.

Seattle, Washington.  Did I mention Seminar was in Seattle?  Right Downtown?  Well, now I have.  Hope to see you October 23-26, 2012!    

NCUA Meeting; Vendor Risk Management; Current Issues in Credit Unions

Written by Steve Van Beek

Just a couple of quick items for your Tuesday.

NCUA Cancels Board Meeting.  Last week, NCUA announced it would cancel its April Board meeting.  This is the second canceled meeting in 2012 for NCUA.  Hopefully, it means NCUA is putting extra effort and attention on reducing the regulatory burden on credit unions.  

Consumer Compliance "Outlook Live."  Yesterday we mentioned the resource Consumer Compliance Outlook from the Philadelphia Federal Reserve.  This group also provides free webinars and recently announced a May 2nd webinar on Vendor Risk Management.    

There are also archived webinars available for viewing:

• Consumer Compliance Hot Topics (December 15, 2011)
• Fair Lending Issues and Hot Topics (November 2, 2011)
• Real Estate Owned (REO) Disposition Risks and CRA Opportunities (October 4, 2011)
• Proposed Ability to Repay Standards for Mortgage Loans (May 26, 2011)
• Loan Originator Compensation (March 17, 2011)
• Risk Based Pricing Notices (February 17, 2011)
• Tips for Reporting Accurate HMDA and CRA Data  (November 17, 2010)
• Consumer Compliance “Top Ten” Lists  (May 20, 2010)
  

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Current Issues in Credit Unions.  The latest Current Issues in Credit Unions podcast (Episode #69) is now available for download and listening.  You can find the agenda as well as past episodes here.    

Rob Rutkowski of Weltman, Weinberg & Reis does a great job with organizing and conducting these podcasts (including the live taping at our 2011 Compliance Seminar - Episode 64).

Rob will also be presenting at two upcoming NAFCU webcasts in April:

• April 11, 2012 (Tomorrow!):  Complying with Regulation B under the CFPB: Protecting Your Credit Union from Unlawful Lending
• April 25, 2012:  Managing Risks for Online Deposit Accounts (Early Bird Pricing ends April 18th)

Updated 2012 NAFCU Credit Union Compliance GPS is Now Available!

Written by Steve Van Beek

Shameless Plug Alert!

We are very pleased to announce the availability of the Updated 2012 NAFCU Credit Union Compliance GPS.  Over the course of the last year, there have been many small tweaks and changes that have made life difficult for credit unions and, specifically, compliance officers (and many others as well).  These included technical changes to regulations as well as substantive changes to regulations and regulators.  

The Updated 2012 GPS has been thoroughly updated and edited to reflect these changes and provide those researching credit union issues a useful, electronic guide. 

For example, the Updated GPS includes:

• A New Section on the Consumer Financial Protection Bureau;
• Updated Links after NCUA's Website Change;
• Updated Regulatory Citations Reflecting the CFPB's Ownership of the Consumer Regulations;
• Links to the CFPB's Version of the Electronic Code of Federal Regulations;
• An Expanded Bank Secrecy Act Section;
• A Separate Section on Vendor Management; and
• Many more additional updates and edits to ensure accuracy.   

In non-bullet format, the Updated 2012 GPS contains all new links to the updated NCUA website (including Legal Opinion Letters and Letters to Credit Unions).  The GPS also contains the new, correct citation to the CFPB's regulations (i.e., 12 C.F.R. 1026 rather than 12 C.F.R. 226 for Regulation Z) as well as links to the CFPB's regulations to help you find the most up-to-date version of the consumer regulations.       

Pricing.  The Updated 2012 GPS is $399 for NAFCU members and $499 for anyone else.  The GPS is not limited to credit unions and can be purchased by anyone interested in learning more about credit union laws and regulations. 

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Table of Contents.  To get a feel for the Updated 2012 GPS, take a look at the following Tables of Contents which list the Sections that are included in each Chapter (plus the Appendix).

• Main Table of Content - 1-Page Snapshot of the 2012 GPS
• Chapter Specific Cover Pages - Listing of the Sections by Chapter
• Complete Table of Content - Listing the Contents of Each Section
• The Consumer Financial Protection Bureau Section Table of Contents 

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Below are a couple of additional items about the Updated GPS.  

Electronic Manual.  The GPS is designed to be a an electronic manual as it contains numerous links to regulations and guidance documents.  Of course, you can print off your own copy of the GPS and use the hardcopy as a quick resource guide.  But, the best bang for your buck is being able to use the electronic links and be taken directly to the NCUA Legal Opinion Letter being described or NCUA's Statutory Lien regulation in 12 C.F.R. 701.39.

Available to Everyone.  The GPS is available for purchase by anyone and everyone.  We've had law firms and audit firms purchase the GPS in the past in addition to numerous credit unions.  Additionally, your credit union does not need to be a NAFCU member to purchase.  We hope the GPS serves as a valuable resource for anyone seeking to learn more about credit unions and the regulations that impact their daily operations.

One GPS Per Credit Union.  Remember - the purchase of the GPS provides access to your entire credit union or organization!  Please feel free to share the GPS with your colleagues at your credit union.  However, we put a lot of time and effort into creating and editing the GPS and we ask that you not share your GPS with other credit unions or third-parties.  

Regulatory Compliance School.  If your credit union sent someone to NAFCU's 2012 Regulatory Compliance School last week, that person should already have an electronic copy of the Updated GPS.  Be sure to track that copy down and share throughout your credit union.  No additional purchase would be required.  

Compliance Officer Skills & 7 Compliance Rules for Non-Compliance Managers

Written by Steve Van Beek

Today is Compliance Officer Skills day at NAFCU's Regulatory Compliance School.  We'll be talking about:

• The Role of the Compliance Officer; 
• How to Conduct Research; 
• Dealing with Outside Counsel;
• How to Write Effectively;
• Policies and Procedures Writing; and 
• Vendor Management.

But, not everyone is a compliance officer or has responsibilities in all of these areas.  

Well, Anthony Demangone had an outstanding blog post at the Musings from the CU Suite blog which highlights his "7 Compliance Rules for Non-Compliance Managers."  I couldn't dream of writing as well as Anthony, so I'll just give you the 7 rules plus an 8th added by a commenter and pass you along to Anthony's post.

1. You are regulated.
2. NCUA writes most of this stuff down.
3. NCUA wears two hats.
4. NCUA isn't always right.
5. It's not just regulations.
6. Ask for help.
7. Read.
8. Bonus: Regulations flow from laws (written by Congress - enough said).

If you are interested, anyone can subscribe to the Musings from the CU Suite blog (which is published a couple of times a week).   

Streamlining Tool; Maturity Limits & Regulatory Review; March Madness

Written by Steve Van Beek

The CFPB's overdraft inquiry (more on this tomorrow) pushed back a couple of items I wanted to discuss.

CFPB's Streamlining Tool.  A couple of weeks ago, the CFPB announced their web-based streamlining tool.  If your credit union has one or two issues you'd like to raise - this is a good format as you wouldn't need to send a formal comment letter.  The web-based streamlining tool is here.

NCUA Opinion Letter.  In mid-February, NCUA made public an Opinion Letter on maturity limits for modified mortgage loans.  The letter is very detailed and includes examples.  The letter is also hard to summarize.  The best approach is to review the complete letter - 11-0903.

NCUA's Reg Review.  The letter interprets 12 C.F.R. 701.21(g) which is one of the sections under NCUA's current regulatory review.  This looks like a perfect place for NCUA to provide clarity in the regulation rather than requiring credit unions to:

• Know the existence of this legal opinion letter;
• Be able to find this opinion letter;
• Properly understand the complicated letter; and 
• Ensure the legal opinion letter has not been superseded by another interpretation by NCUA.

By incorporating this letter into NCUA's regulations, NCUA would help credit unions and those working with credit unions find NCUA's interpretation for the maturity limits for modified mortgage loans.  It may seem counterintuitive, but incorporating the letter into the regulation eases the regulatory burden on credit unions.  

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The language of the letter indicates NCUA has received multiple requests on the same issue.  There are undoubtedly numerous other credit unions who have had the same questions and concerns who may not have taken the formal approach of reaching out to NCUA.  

One of the things about guidance is that it exists somewhere on the internet.  With NCUA's recent approach to look at rules that are "outmoded, ineffective, insufficient or excessively burdensome", this opportunity is served up on a silver platter as NCUA could ensure its opinion was clear and easy for credit unions to find and understand by amending 12 C.F.R. 701.21(g) to reflect their interpretation on maturity limits for loan modifications.  

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March Madness - D3 Edition.  March Madness usually starts a bit early in the Van Beek household as both my wife and I went to Division 3 schools.  She went to the College of Wooster in Ohio and I went to Hope College in Michigan.  Well, the Division 3 brackets were just announced and there is a possibility our alma maters could be facing off next Friday.  Each team would need to win two games but both teams are hosting their games this weekend.  And, both teams have a pretty good pedigree as Wooster finished runner-up for the championship last year and Hope is currently ranked #1 (you can find Wooster way down at #15).

Blog Readers:  If your teams are in - let's hear about your rooting interests in the blog comments (click the title of the blog post to go to the blog itself).  The full bracket can be found here.      

New NAFCU Blog, Same Approach

Written by Anthony Demangone 

When my father dropped me off at McKean Hall for my freshman year at Penn State, I knew I wanted to be a journalist.  I quickly joined the college newspaper and started writing.  I never found stories about intrigue and politics interesting to write.  Rather, I focused on things that interested me.  

I somehow got sidetracked on my road to the Pulitzer Prize. Life happens.  But my love of writing never wore off.  That’s one of the reasons I started the NAFCU Compliance Blog back in 2007.  

But life happened…again.   When I took on the role of NAFCU COO, I handed off this blog to Steve’s capable hands.  

Well, the addiction has overtaken me yet again.  As Steve mentioned a few weeks ago, I’ve started a new blog – Musings from the CU Suite.  What’s the new angle?  Work and management are tough.  But there’s a ton of good information out there about how to be better at both.  My new blog will attempt to bring the best of all of that to you.  

I hope you consider wandering over to sign up for the blog.  It would be great to have you join the conversation.

Now, I did write along those lines a wee bit back in the day.  Here are some of those old posts, which I hope you find useful.  

• Just how did my view of compliance change now that I’m NAFCU’s COO?
• A good compliance officer should try to read the tea leaves.
• In an age of Google, Facebook, Twitter, and iPads, don’t forget the research power of picking up the phone. 
• The art of making decisions when you are “off the grid.”
• My ode to compliance officers.  

Have a great week, guys.  

NCUA Report; Reg Alerts on Loan Participation & Reg Flex Proposals

Written by Steve Van Beek

Below are a couple of items for your Wednesday.  

NCUA Report - January 2012.  The latest version of the NCUA Report is available.  The following two articles definitely caught my eye:

• A Frequently Asked Questions section on the FFIEC Online Authentication Guidance
• A discussion on What is a Minority Credit Union?

The FFIEC discussion indicates that credit unions should keep an eye out for upcoming FAQs from the Agencies as well as updated examination guidance:

"NCUA and other FFIEC agencies are now developing a set of frequently asked questions and will issue the document when completed. In addition, NCUA will issue a Letter to Credit Unions with updated examination questionnaires covering NCUA’s expectations by customer authentication, layered security, or other controls in early 2012." 

In the discussion on Minority Credit Unions (MCU), NCUA indicates their collection of information via the call report is an interim process until an Interpretive Ruling and Policy Statement (IRPS) is issued and approved:

"NCUA must develop and approve an Interpretative Policy and Ruling Statement before it can implement the MCU Preservation Program. However, using the Call Report enables NCUA to identify potential MCUs so NCUA can assess the characteristics and/or unique structure to consider program and policy development. NCUA plans to disclose a list of all MCUs on its OMWI webpage. This list will enable organizations to initially identify minority owned institutions that they may wish to partner with or establish business relationships. For example, banks can now obtain Community Reinvestment Act credit for investing in minority-owned institutions."

The full NCUA Report is here.

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NAFCU Members.  Our Regulatory Affairs team has issued Regulatory Alerts on both the Loan Participation Proposal and the Regulatory Flexibility Proposal.  As always, we are eager for your input to help us draft our comments to NCUA.  

Member Education: Online Authentication; Savings Bonds; Share Insurance

Written by Steve Van Beek

A few recent NCUA Letters to Credit Unions have included information regarding member education.  Below are a few areas where credit unions have been encouraged to educate members - in addition to the required regulatory disclosures already provided.

Member Education for Online Authentication

The recent online authentication guidance included a section on member education.  Pages 7 and 8 of the guidance include information on educating members.  Below are two of the types of communications that are expected:

• An explanation of under what, if any, circumstances and through what means the credit union may contact a member on an unsolicited basis and request the member’s provision of electronic banking credentials; and
• A listing of institutional contacts for members’ discretionary use in the event they notice suspicious account activity or experience member information security-related events.  

The guidance does not mention how often or in what format this information should be provided.  This provides credit unions with some flexibility in communicating with members.  It is quite possibility that credit unions already provide some of this information to members on a regular basis as a fraud prevention tool.  If so, be sure include those efforts in your documentation for the latest FFIEC guidance.  

Savings Bonds - Reminder: No more over-the-counter savings bonds sales after 12/31/2011 

NCUA's Letter to Credit Unions 11-CU-15 on Changes to Savings Bonds included information on educating members.  Here is from the Letter:

"Educate members about the upcoming changes. Let your members know they will no longer be able to buy paper savings bonds at your credit union or by mail order.  You are also encouraged to refer members to www.treasurydirect.gov where they can purchase, manage, and redeem electronic savings bonds online.  Electronic savings bonds are secure and convenient to manage in a TreasuryDirect account, and your members will no longer have to worry about storing, misplacing, or losing paper savings bonds.  In addition, with a TreasuryDirect account, members can purchase electronic savings bonds as gifts and convert paper savings bonds to electronic ones."

In this situation, NCUA is simply indicating credit unions should make members aware of the change and their options going forward.  

Share Insurance Coverage

Going back to 2008, NCUA issued Letter to Credit Unions 08-CU-18 on educating members on share insurance coverage.  The 2008 letter was written during the uncertainty of the financial crisis.  However, the message should not be lost on credit unions - especially with the influx of new members coming over from banks who might not be familiar with the share insurance coverage provided by the National Credit Union Share Insurance Fund.  

Going Forward

As the CFPB begins to regulate, there will most likely be additional pushes toward member education.  Credit unions should continue their efforts to provide education to members through their websites, newsletters and statements to ensure members are informed.  

As your credit union provides education to your members, document your efforts.  The credit union might offer this education anyway, but it can also be useful to document compliance.  For example, if you credit union offers identity theft or fraud prevention workshops - be sure to include this information as part of your compliance efforts to meet the expectations of the latest online authentication guidance.  

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Programming Update:  NAFCU's offices will be closed on Friday, December 30th and Monday, January 2nd.  We'll be back blogging in 2012!  Have a Happy New Year!