Credit Unions Don’t Adequately Protect Consumers? That’s News To Me

December 3, 2020 at 9:34 am 2 comments

At yesterday’s budget briefing, NCUA Board Member Todd Harper continued his push for NCUA to adopt an examination framework which includes a consumer protection component. According to Board Member Harper, who has championed this issue since 2019, “we know that the NCUA falls short when it comes to the agency’s oversight of consumer financial protection laws. Consumers, regardless of their financial provider of choice, deserve to have the same level of financial protection, yet we do not adequately assess consumer compliance management systems or even basic compliance with consumer financial protection laws in most credit unions.” Harper’s solution is for the NCUA to join other financial regulators to assign a separate consumer compliance rating to the examinations of credit unions with $1 billion or more in assets. 

These are big charges for a board member to make. The problem is that there continues to be a lack of evidence that credit unions fall short when it comes to consumer compliance. Credit unions have many faults, but a lack of commitment to consumer compliance is not one of them. In fact, I would suggest that if anything, there are some credit unions which do not appropriately balance the need for good faith compliance against the need to invest in other areas of credit union concern. Remember, for those credit unions with over one billion dollars in assets who would be subject to the increased scrutiny, the explosion of class action consumer litigation we’ve seen over the last decade provides more than enough incentive to comply with consumer protection laws. 

The policy debate playing out between Board Member Harper and Chairman Hood will ultimately be decided by Kyle Hauptman, whose nomination to the board was just approved by the Senate. As he considers the issue, the question he should ask himself is this – is there evidence that the credit union industry is systemically failing to adequately protect the consumer rights of its members, or are the board member’s concerns a solution in search of a problem that does not exist?

Entry filed under: Compliance, Regulatory. Tags: , , , , .

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2 Comments Add your own

  • 1. Callmesceptical  |  December 3, 2020 at 12:20 pm

    Excellent article Henry. One data point that could be informative, but probably not available: The first CFPB consumer protection exams for CUs that cross the $10B threshold. If those reports showed excessive non-compliance with consumer protection laws, that could be something that would echo across many larger CUs. But if not, then we should be asking where the smoke is coming from for these alleged fires before buying into the story, including the NCUA’s budget.


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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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