NAFCU Compliance Blog

Leadership; QRM; Interchange Update; September Compliance Monitor

Written by Steve Van Beek

Last week, I wrote an article for CUinsight.com that asked How Can Credit Unions Create a Culture of Compliance? Here is a snippet:

"So, how can we change our culture into a culture of compliance – an environment where we can stop compliance snafus before they begin, by building risk management into product development from the start?

In the past, a compliance officer would be brought into a discussion at the tail end of a project’s development, to give approval or disapproval. In today’s world, a compliance officer needs a seat at the table to help evaluate the various risks of a new product or service. The Consumer Financial Protection Bureau is not just rule- and requirement-focused – it is principle-focused. Their offices want to know not only if a credit union’s product or service is compliant with rules and guidance, but if that product or service provides a real benefit to members." (Emphasis added).

As compliance plays a larger and larger role at credit unions, compliance officers need to expand their skill sets. Rather than sitting back, they need to take charge and demonstrate how an effective compliance program at the credit union can reduce compliance, strategic and reputation risks. 

While compliance professionals usually attend NAFCU's two compliance conferences (School & Seminar), I'd recommend taking a look at NAFCU's Management & Leadership Institute - October 7-11 in Philadelphia, PA. To successfully create a culture of compliance, compliance officers need to expand their leadership skills and this conference provides those tools - including:

• Tools to effectively build relationships with board members;

• Successful communication techniques to help move projects forward;

• Tactics for leading a successful credit union— from operations to marketing; and

• Clarity on board vs. management roles.

More information on the "institute experience" can be found here and the overall conference details are here.

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Qualified Residential Mortgage Proposal. Last week, the FDIC, OCC, FHFA, SEC and the Federal Reserve released a joint proposed rule (replacing the prior proposal) that would define a "qualified residential mortgage." Importantly, this proposed rule would not directly impact credit unions; however, it will impact the secondary mortgage market. 

One important improvement is that the proposed definition of "qualified residential mortgage" would be aligned with the CFPB's definition of "qualified mortgage." However, the devil is always in the details and the proposed definition of "qualified residential mortgage" would only be aligned with the CFPB's "general definition of qualified mortgage." According to the proposal, the definition of "qualified residential mortgage" would not include a mortgage that attains “qualified  mortgage” status on the basis of being eligible for purchase by Fannie Mae or Freddie Mac, issued by a “small creditor” (as defined in the CFPB’s rule), or is a “qualified mortgage" balloon loan.

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Latest Interchange Video. Looking for the latest on interchange? Check out NAFCU's Interchange Fee issue page - including the latest video update from NAFCU's Carrie Hunt.

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September Compliance Monitor. The September 2013 NAFCU Compliance Monitor is now available for download by NAFCU members. This month's articles are on NCUA's Loan Participation Rule and the CFPB's Remittance Transfer Rule. And, of course, the latest Compliance Calendar is also available.

Update on Interchange Fees; CFPB Releases Supervisory Highlights; Seminar Savings End Today

Written by Steve Van Beek

Happy Friday! First off, there was another hearing on Wednesday discussing the interchange fees and the next steps for the Federal Reserve. At the hearing, the Federal Reserve indicated:

• It was appealing the District Court decision;
• It was requesting a stay of the decision (and if that was denied, they would appeal that decision); and
• It was seeking an expedited appeal to return certainty to the market.

Interestingly, the merchants supported the Fed's request for a stay - as a world without the Fed's regulation would mean no cap on interchange fees.

For additional information, be sure to review NAFCU's video update featuring Carrie Hunt, NAFCU's senior vice president of government affairs and general counsel:

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CFPB's Supervisory Highlights. On Wednesday, the CFPB issued their second Supervisory Highlights Report (which looks at exams completed between November 2012 and June 2013). 

The first two sentences of the CFPB's press release sum up the report:

"Today, the Consumer Financial Protection Bureau (CFPB) issued a report detailing mortgage servicing problems at banks and nonbanks. The report also found that many nonbanks lack robust systems for ensuring they are following federal laws."

We'll be taking a deeper look at this report in future blog posts but, for now, be sure to read through the press release.

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NAFCU's Regulatory Compliance Seminar. Today is the last day of savings for NAFCU's Regulatory Compliance Seminar - October 22-25 in Nashville, Tennessee. Need to convince someone at your credit union that you need to attend? I'm biased, of course, but pass along the Curriculum and the Faculty information and that should help!!

Hope to see you in Nashville! And, the seats are filling up fast - if you are planning on attending - register soon!

Metsger; Latest on Interchange Fees; Compliance Seminar versus Compliance School

Written by Steve Van Beek

NCUA Board. Rick Metsger will be sworn into office as an NCUA Board member on August 23 in a private ceremony on Capitol Hill. NCUA General Counsel Michael McKenna will deliver the oath of office to Metsger, paving the way for Metsger’s participation in NCUA's September 12 Board meeting (there will not be an August meeting).

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Interchange Fees (Durbin Amendment). As we mentioned on August 1st, the Federal Reserve's interchange regulation was overturned by a Federal District Court leaving the interchange fee caps and the network exclusivity provisions in limbo. On Wednesday, Judge Richard Leon held a hearing which focused on whether Federal Reserve should write an Interim Final Rule.

For additional information on the next steps, check out Carrie Hunt's video recap:

For background information on the Interchange Fee issue, check out NAFCU's Issue Brief (and consider attending NAFCU's Congressional Caucus next month). 

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Seminar versus School. We're often asked which of NAFCU's compliance conferences is right for a particular individual. Below are a few guidelines that should help. Of course, if you have any questions - please shoot me an email and I'll be happy to help. 

Regulatory Compliance Seminar

• Four days each October at different locations throughout the country. Next: October 22-25, 2013 in Nashville, Tennessee. Sneak Peek: October 14-17, 2014 in Baltimore, Maryland (registration coming soon!)

• Sessions include in-depth discussion of the hottest compliance issues facing credit unions - including detailed analysis of new and future regulations. For example, this year's conference will have multiple sessions reviewing the new mortgage regulations.

• Perfect conference for existing NAFCU Certified Compliance Officers (NCCOs) to obtain recertification (no exams!)

• Reconnect with your network of compliance professionals from around the country

Regulatory Compliance School

• Five days each March in the Washington D.C. area. Next: March 10-15, 2014 in National Harbor, Maryland. Registration is open; details coming soon (check out 2013 School for a good outline).

• Perfect conference for individuals interested in obtaining their NAFCU Certified Compliance Officer (NCCO) designation. Attendees have the option of taking the NCCO exams on-site (exams are the morning following each day of content).

• Sessions provide a comprehensive foundation of the compliance environment facing credit unions. We walk through the nuts and bolts of various regulations - such as Regulation D, Regulation E and Regulation Z - and review topics such as Share Insurance, the E-SIGN Act and Privacy of Member Information. Bring your pencils (and your sharpener(s))!

• Ideal for new compliance officers, those taking on more and more compliance responsibilities as well as those who are looking for a comprehensive "refresher" (School also provides 24 credits for existing NCCOs to complete their recertification).

We hope to see you Seminar or School in the upcoming year! For 2013 Seminar in Nashville - be sure to register by Friday, August 23 to lock-in early-bird savings!

Fed's Interchange Rule Overturned; Management & Leadership Institute

Written by Steve Van Beek

Programming Note: For the month of August, we'll be blogging on Monday, Wednesday and Friday rather than our usual every business day. If you need a NAFCU blog fix on Tuesdays and Thursdays, I strongly recommend Anthony Demangone's Musings from the CU Suite blog (subscribe here).

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Interchange. Yesterday, a federal district court ruled that the Federal Reserve Board failed to carry out federal statutory requirements on debit interchange fees in its final rule (Regulation II). For now, the current rules will remain in place. If any appeals are unsuccessful, the Fed would need to write new rules (including possibly an interim final rule). 

Of particular note for credit unions is the judge's rejection of the Fed's network exclusivity provisions in 12 CFR 235.7. Under the current rules, a credit union complies if it has two unaffiliated networks (one signature, one PIN). The judge indicated the Fed's interpretation of the Durbin Amendment was improper and the future rules would need to have network exclusivity provisions that require two unaffiliated signature networks and two unaffiliated PIN networks.

What we don't know is how long the process (including any potential appeal by the Federal Reserve) would take before we have a new rule. And, after the new rule - how long will the implementation period be for credit unions?  

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NAFCU's Management & Leadership Institute. While we normally discuss compliance issues (and conferences), I wanted to make sure you were aware of NAFCU's Management & Leadership Institute in Philadelphia - October 7-11, 2013.

The Management & Leadership Institute features a mixture of classroom discussions, case studies and proactive strategy coursework and you'll walk away with:

• A solid understanding of financial management, including how to conduct accounting cost analysis
• Clarity on board vs. management roles
• Tools to effectively build relationships with board members  
• Successful communication techniques to help move projects forward
• Tactics for leading a successful credit union— from operations to marketing
• A strong network of colleagues that share your drive for leadership excellence

The Institute will also feature a full-day leadership workshop with award-winning expert John Spence.

But, don't take my word for it - listen to John Spence here:

Sound interesting? Take a look at the Institute Experience and the words of a past attendee. 

Register by August 8 and save $100!

Potential Credit Card Surcharges; Legal Hurdles in 2013; NAFCU Member Call-In; Save $100 on NAFCU Conferences; NCCO Exam Info

Written by Steve Van Beek

I'm sure everyone has plenty of reading to do with the mortgage regulations (I sure do!), so here are a few small items that should be on your radar.

Potential Credit Card Surcharges.  As part of a recent settlement, merchants gained the ability to surcharge for credit card purchases on January 27, 2013.  While this won’t directly impact your credit union, it has the potential to impact your members.  It is unknown how prevalent merchant credit card surcharging will be, but it might be a good idea to put an article in your credit union newsletter or some information on your website.  For more information, visit VISA’s website – which includes a list of state laws that still prohibit surcharges.  

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Legal Hurdles in 2013.  The Credit Union Times ran a great article from Andy Keeney of Kaufman & Canoles on Legal Hurdles Facing Credit Unions in 2013.  Be sure to take a look and pass along to your colleagues.

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NAFCU Members:  Don’t miss NAFCU’s first Member Call-In of 2013 – February 12 at 3:30 p.m. EST.  NAFCU’s President and CEO Fred Becker and NAFCU’s Government Affairs team will provide updates on the legislative, regulatory and compliance landscapes.  The call is free, but you must register.  New to 2013: You can submit questions in advance using the form here.  Of course, if you have a specific compliance question you can always email NAFCU’s Compliance team directly.   

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Extra Savings for School & Seminar end on Thursday.  NAFCU is offering $100 off any conference through Thursday, January 31st.  This includes NAFCU's Regulatory Compliance School (March 18-23 at National Harbor, MD) and NAFCU's Regulatory Compliance Seminar (October 22-25 in Nashville, TN).  

Use the promo code NEWYEAR when your register to get the $100 off. 

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School & NCCO Exams.  For those of you registered for School (or considering it), we've put together some FAQs on the process for taking the NAFCU Certified Compliance Officer (NCCO) exams.  We'll also have a NCCO Exam orientation on Sunday, March 17th (optional) as well as quick NCCO Study Sessions at the end of each day to help you keen in on which issues to study for the Exams.  

Upcoming Compliance Deadlines - Spring 2012

Written by Steve Van Beek

There are a few upcoming deadlines to make sure your credit union is making progress on.  

HMDA Reporting.  The deadline for HMDA submissions is March 1, 2012.  NCUA issued a Regulatory Alert earlier this month - 12-RA-01 - that highlights the reporting deadline.  

ADA & ATMs.  The March 15, 2012 deadline for compliance with the ADA requirements for ATMs is quickly approaching.  Remember, document your process and your communications with your vendors as it could be useful if there are delays and the CU faces a lawsuit.   

The speech output requirements apply to all ATMs and need to be in place by March 15, 2012.  The physical access requirements apply to ATMs that are altered after March 15, 2012.  The physical access requirements also apply to any new ATMs added after March 15, 2012.  Existing ATMs that comply with the 1991 ADA standards for physical access and are not altered would not need to be modified.  Additional information is available in last month's blog post.

Durbin - Unaffiliated Networks.  The requirement for unaffiliated networks goes into place on April 1, 2012.  This requirement means credit unions need to have two unaffiliated networks - such as one PIN network and one signature network - for processing transactions.  Additional information and details on this requirement can be found in our January 30th blog post.   

NLRB Notice.  Credit unions should be posting the National Labor Relations Board (NLRB) Employee Rights poster by April 30, 2012.  A couple past NAFCU blog posts discussed this issue in more detail:  January 4, 2012 and December 2, 2011.