Updating Credit Card Disclosures; 2012 NAFCU Regulatory Compliance School

Written by Steve Van Beek

The transition of the regulations will cause numerous tweaks and changes for credit unions that regulators might view as technical or non-substantive.  These tweaks and changes, unfortunately, will require credit unions to take steps to ensure their disclosures are accurate.  For example, the move to the CFPB will require credit unions to update their application and account opening disclosures for credit cards.  

References to the CFPB in Credit Card Application & Account Opening Disclosures

One of the changes over the past years to Reg Z required tabular formats for credit card application and solicitation disclosures as well as account opening disclosures for credit cards.  One of the required disclosures is information informing borrowers of the ability to obtain additional information from the Federal Reserve's website.  

• For a good visual of this disclosure, view the Fed's G-10(B) Model Form under the "For Credit Card Tips from the Federal Reserve" section.  

The transition of Regulation Z to the CFPB brought with it a tweak to this disclosure requirement.  Credit unions will need to update their disclosures to refer to the CFPB and the CFPB's website in the future.

• Here is the CFPB's G-10(B) Model Form from Appendix G of Section 1026.  See the section "For Credit Card Tips from the Consumer Financial Protection Bureau."

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When must credit unions update their disclosures?  The CFPB gave institutions one year to make the update.  Credit unions will need to ensure their disclosures reflect the CFPB's information by January 1, 2013.  

Here is the language from the application and solicitations disclosure regulation - 12 CFR 1026.60(b)(15):

"(15) Web site reference. A reference to the Web site established by the Bureau and a statement that consumers may obtain on the Web site information about shopping for and using credit cards. Until January 1, 2013, issuers may substitute for this reference a reference to the Web site established by the Board of Governors of the Federal Reserve System." 

Similar language is included in 12 CFR 1026.6(b)(2)(xiv) for account opening disclosures.  The CFPB discussed this tweak in the preamble to its republishing of Regulation Z.  

Note:  This disclosure is only required for credit card accounts - thus, the tweak would only need to be made on your credit card application and solicitation disclosures and your credit card account opening disclosures.

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Shameless Plug.  The flip of the calendar to 2012 means NAFCU's Regulatory Compliance School is not far away.  The 2012 Regulatory Compliance School will be held March 12-16 at the Gaylord National in National Harbor, Maryland.  The School Curriculum is listed here.  

For those of you interested in earning your NAFCU Certified Compliance Officer (NCCO) designation, attending Regulatory Compliance School and taking the required exams is the route chosen by most NCCOs.  

Attendees at school also receive NAFCU's Credit Union Compliance GPS which is the basis for the school sessions and the NCCO exams.  

Register by January 20, 2012 and Save $100 off registration.  Use the promo code NEWYEAR during registration to save an additional $100 off registration (promo code valid through January 31, 2012).

Remember - all of NAFCU's events are available to everyone.  Anyone interested in learning more about regulatory compliance issues facing credit unions is welcome to attend.  We hope to see you in March!

Comments

[Darla Grimes]

Since this is not a substantive change, will this require a 45 day change in terms notice?

[Steve Van Beek]

Darla,
Based on the language of Regulation Z - the change from the Fed's contact information to the CFPB's contact information is considered a "significant change in account terms." This is because the website information is required under 12 CFR 1026.6(b)(2)(xiv). Since the website information is covered by 1026.6(b)(2) - the 45-day change-in-terms notice is triggered (as is the right to reject). This is despite the fact that the change was mandated by Dodd-Frank and the regulators and not a change the credit union made. This is clearly one of those unintended consequences that seem to pop up more and more as the regulations become more complex.

[JC Campos]

I understand that a change in the terms listed under 12 CFR 1026.6(b)(2) is a "significant change", but are we really "changing" any account terms for existing credit card customers? The CFPB website is not part of our account agreement with our customer, and does not affect their account with us. In other words, we are not changing that term for existing customers. The existing customers can continue to look to the FRB for this information. We are only required to disclose this new website information when a new account is opened, and only after January 1, 2013.

[Steve Van Beek]

JC,
We have a blog post scheduled for Tuesday, October 23rd which will look at the details and confusion related to this change-in-terms issue. Stay tuned.