CUNA Comment Letter
CUNA Comments on Part 707, Truth in Savings Act
May 26, 2009
Ms. Mary F. Rupp
Secretary of the Board
National Credit Union Administration
1775 Duke Street
Alexandria, Virginia 22314-3428
|RE:||CUNA Comments on Part 707, Truth in Savings Act|
Dear Ms. Rupp:
The Credit Union National Association (CUNA) appreciates the opportunity to comment on the National Credit Union Administration's (NCUA's) proposed changes to its Truth in Savings Act (TISA) rules. The proposal will incorporate two recent final rules that were issued by the Federal Reserve Board (Board) under Regulation DD, one of which imposes disclosure requirements for overdraft protection plan fees, while the other addresses the TISA requirements for electronic disclosures. CUNA represents approximately 90 percent of our nation's 8,000 state and federal credit unions, which serve approximately 92 million members.
Summary of CUNA's Comments
- The current requirement to disclose on the periodic statement the fees charged for overdraft services and the fees charged for returning items unpaid, both for the statement period and for the year-to-date, will be extended to all credit unions, not just those that "promote the payment" of overdrafts. We question the need to expand these requirements and believe NCUA should collect additional information from credit unions directly to determine if there is a specific need to expand these requirements.
- CUNA supports the new requirement that funds accessible under an overdraft protection plan may not be included as part of the available balance that is provided in response to a consumer's inquiry.
- CUNA supports the proposal with regard to providing the required disclosures electronically and the flexibility this will provide for credit unions. However, we recognize that additional guidance may be needed in the future as technology evolves, and CUNA looks forward to assisting NCUA if and when the need arises.
Disclosure Requirements for Overdraft Protection Plans
In 2005, both the Board and NCUA amended Regulation DD to require financial institutions that "promote the payment" of overdrafts to disclose on the periodic statement the fees charged for overdraft services and the fees charged for returning items unpaid, both for the statement period and for the year-to-date. This proposal will expand these disclosure requirements to all credit unions, regardless of whether they promote the payment of overdrafts, consistent with the final rule that was issued by the Board in December 2008, which will now apply to all banks and thrifts.
As we outlined in our comment letter in response to the Board's proposal last year, extending this requirement to all credit unions will require significant processing changes, as was the case for those institutions that were required to comply with the 2005 rule changes. Before requiring this significant investment, we strongly urge NCUA to conduct a survey of those credit unions that are currently required to comply with these disclosure requirements because they "promote the payment" of overdrafts. This survey should collect information to determine whether members believe the disclosures regarding overdraft fees and returned check fees are useful. We suspect the survey will demonstrate that these disclosures are not helpful and, instead, are another example of information overload that is confusing to consumers.
We recognize that TISA requires NCUA to issue rules that are substantially similar to the Board's, taking into account the unique nature of credit unions. However, we request that NCUA review this issue to determine if some flexibility is possible for credit unions to disclose this information in a less burdensome manner or work with the Board to provide flexibility for the entire industry. We believe credit unions compare quite favorably with regard to the fees charged for overdraft protection and generally take measures to help their members when the number of returned checks on an account becomes excessive. We believe this level of accommodation justifies an exemption for credit unions with regard to these new disclosure requirements.
When responding to a consumer's inquiry regarding the available balance on an account, the proposal will require financial institutions to disclose only the amount of funds available for the consumer's immediate use or withdrawal, which must not include any additional amounts available under an overdraft protection plan. CUNA supports this proposed change and believes it is necessary to ensure that these response systems are not structured as a means to mislead consumers into incurring overdraft fees by overdrawing their accounts. NCUA's proposal will help achieve this goal.
In 2001, the Board issued interim final rules regarding the electronic delivery of the disclosures required under TISA, as well as the other consumer lending rules that the Board administers. These were intended to ensure consistency with the Electronic Signatures in Global and National Commerce Act (E-Sign Act), which permits the use of electronic signatures and disclosures, as long as appropriate consent is received from the consumer. These 2001 rules were never finalized. The Board later proposed alternative rules, which were finalized in October 2007 and are substantially similar to NCUA's current proposal.
Under the Board's 2007 rules, the various applications, solicitations, and advertisements that are provided electronically under these consumer protection rules must also include the required disclosures, and consumer consent will not be required when providing these disclosures, notwithstanding the general requirement to obtain such consent, as outlined in the E-Sign Act. We agree with this approach and do not believe that separate consumer consent should be necessary in order to provide these required disclosures.
By taking the action to access these applications, solicitations and advertisements, we believe consumers have elected to receive this information electronically, and this includes receipt of the accompanying disclosure information. Electing to receive this information would seem to be equivalent to consent, and this should be sufficient for purposes of complying with the consumer consent provisions of the E-Sign Act.
As outlined in our comment letter in response to the Board's 2007 proposal, we supported the Board's decision to eliminate a number of the timing and delivery requirements that were included in the 2001 interim final rules. These requirements included:
- The requirement to send disclosures to a consumer's email address, or post the disclosures on a website and then send a notice alerting the consumer that the disclosures have been posted
- The requirement that if a disclosure is returned undelivered, the creditor must then attempt redelivery, based on the address information that is on file.
- The requirement that the disclosures must be made available on the creditor's website, or other location, for at least 90 days.
We are especially pleased with the flexibility that will result from the elimination of any requirement to send disclosures to a consumer's e-mail address, as this will allow the information to be delivered through a financial institution's home banking system. This flexibility was emphasized in CUNA's 2007 comment letter in response to the Board's proposal in which we stressed that providing information through home banking systems can be a very effective means and is the method that is becoming the preferred approach among financial institutions.
Although credit unions generally appreciate the specific guidance that NCUA and the Board often provide with regard to consumer protection rules, we agree that such specific guidance is not advisable at this time as it pertains to electronic disclosures. The delivery of electronic disclosures, as with other aspects of the E-Sign Act, is an area that will change rapidly as technology evolves. For this reason, we encourage an approach that will allow credit unions to adopt procedures for the delivery of electronic disclosures that will best address the needs of their members, which may very well change over time. Providing specific guidance may hinder this flexibility.
However, we also believe that NCUA and the Board can and should examine these issues in the future and take the opportunity at that time to provide guidance, if the need arises. We look forward to assisting the agencies in these future efforts. Credit unions, as not-for-profit financial institutions, are in the unique position of being able to provide an industry perspective while emphasizing the consumer protection needs of its members. We believe this perspective will be invaluable on this and all other proposals and issues affecting the consumer protection rules that NCUA and the Board administers.
Thank you for the opportunity to comment on these proposed changes to the TISA rules. If you or other Board staff have questions about our comments, please give Senior Vice President and Deputy General Counsel Mary Dunn or me a call at (202) 638-5777.
Senior Assistant General Counsel