New Rules from the CFPB and NCUA Will Dominate the Compliance Landscape in 2013
MADISON, Wis. – Credit union compliance staff will spend most of their time on new proposed and final rules issued by the Consumer Financial Protection Bureau (CFPB) in 2013 attendees of CUNA Mutual Group’s Online Discovery Conference were told on Tuesday by Lauren Calhoun, and Bill Klewin, both of CUNA Mutual Group.
“This has been the most challenging regulatory environment we have ever had in my 30 years of experience with lending compliance. And it will continue to be one of the most challenging as we move forward,” said Klewin, director of regulatory compliance. The complexity and depth of compliance changes will tax credit union staff, create additional expense and could have a negative impact on member service.
“The CFPB has issued 3,365 pages of proposed rules in just one six week period this summer. That is on top of the hundreds of pages of rules already issued this year. Some of the changes will be technical in nature, while others, such as the proposed mortgage rules, will require a complete overhaul of credit unions’ mortgage lending portfolio,” said Calhoun, regulatory compliance manager.
“Mortgages, mortgages, mortgages will consume credit union compliance staff in 2013 and beyond,” said Calhoun. The CFPB has issued seven proposed mortgage rules, each with comment period closing dates in October or November. The CFPB will analyze comments and issue final rules in January 2013 and throughout the year, dependent on the rule.
A more immediate rule that has been clarified for credit unions is the Remittance Transfer Rules, which has a mandatory compliance date of Feb. 7, 2013. A credit union must comply with the new rules if it initiates more than 100 remittance transfers in a calendar year. The required disclosures –a pre-payment disclosure and a receipt -- are pretty simple; it will be the execution of completing the forms that will be difficult. It will additionally require training new employees as well as developing new processes to be sure the new disclosures are distributed in a timely fashion.
Other potential regulatory changes from the CFPB on the horizon include:
- Know Before You Owe: Student Loans and Credit Cards
- Overdraft Protection
- Servicemembers Civil Relief Act (SCRA)
Klewin also outlined options for credit unions in light of the NCUA’s recent letters regarding open-end lending. He feels most credit unions that are still using Multi-Featured Open-End Lending (MFOEL) will likely move to a combination of open-end and closed-end lending. “There isn’t just one cure-all or an easy solution that will still allow you to do MFOEL. But today, most MFOEL convenience can be replaced in a compliant manner with technology such as electronic disclosures and signatures,” said Klewin.
A key to managing all of the complex regulatory changes will be finding competent compliance staff and giving them the tools and resources to upgrade their skills and influence. Although more than one department may be working on compliance, there needs to be one person who has the overall accountability for it at the credit union. This person needs to report at an appropriate level in the organization to influence and coordinate across departments.
Online Discovery is CUNA Mutual Group’s Web-based equivalent of a face-to-face conference without the associated expenses or time away from the office. The free, online event attracted a national and international audience of more than 1,800 credit union and league staff. The conference aims to help credit unions solve problems, face challenges, and address opportunities all from the convenience of their computer.
CUNA Mutual Group insurance, retirement and investment products provide financial security and protection to credit unions and their members worldwide. With more than 75 years of true market commitment, CUNA Mutual Group’s vision is unwavering: To be a trusted business partner who delivers service excellence through customer-focused products and market-driven insight. More information on the company is available on the company’s website at www.cunamutual.com.
CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates. Life, accident, health and annuity insurance products are issued by CMFG Life Insurance Company. Property and casualty insurance products are issued by CUMIS Insurance Society, Inc. Each insurer is solely responsible for the financial obligations under the policies and contracts it issues. Corporate headquarters are located in Madison, Wisconsin.