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CUNA asks Fed to clarify short compliance period
WASHINGTON (8/24/09)--The Federal Reserve Board has authority to provide grater relief to credit unions from the requirements of the 21-day rule under the new Credit CARD Act a they apply to open end credit, the Credit Union National Association (CUNA) has again advocated in a comment letter on the agency's interim final rule it filed Thursday, August 20--the effective date of the interim final rule. In light of the "formidable obstacles" to compliance that credit unions are facing, CUNA has urged the Board "to do what it has done in the past to facilitate compliance with Truth-in-Lending (TILA) requirements -- invoke its authority under Section 105 of TILA to limit the scope of these requirements or provide more time to comply, " CUNA Senior Vice President and Deputy General Counsel Mary Dunn wrote to the Board. The comment letter is the most recent of a series of CUNA communications with Board officials following the law's enactment. Under the interim final rule, creditors must adopt reasonable policies and procedures to ensure periodic statements for open-end accounts are mailed or delivered to borrowers at least 21 days before the payment is due. Otherwise, if the payment is made after that time frame, the creditor may not treat it as late for any purpose, including charging a late fee, reporting the account as delinquent to credit bureaus, or imposing a penalty interest rate. While the Board has declined to provide the relief CUNA urged, CUNA's letter notes that the Board has allowed credit unions "for a short period of time" to prominently disclose on or with the periodic statement that the member's payment will not be considered late if received within 21 days after the statement is mailed or delivered and that this alternative will facilitate compliance for some credit unions. Dunn urged the Board to clarify that "short period of time" is "the amount of time it takes for a credit union to be in compliance with the provisions of the rule, as long as the credit union is proceeding in good faith to meets its obligations within a reasonable amount of time." This time period will likely vary among credit unions and could be up to six months or longer, CUNA said. "In any event, we urge the Board to refrain from any action that would undermine this reasonable interpretation, " Dunn wrote. The letter also encouraged the Board to provide guidance on permissible collection activates and to clarify that permissible, legal actions to collect an underlying debt would not be in violation of the final rule. The Fed should also clarify whether or not posting periodic statements on the financial institution's website at least 21 days before the payment is due will be considered sufficient if consumers choose to manage their accounts electronically. The rule does not currently state whether or not a separate email that notifies the consumer that his or her account statement has been posted is needed to comply with the rule, and CUNA also sought clarification on this matter. CUNA further argued that the 21 day rule should not apply to short-term open-end lending products offered by some credit unions. CUNA will file a second comment letter to detail other concerns regarding the interim final rule, such as the application of the 45-day change-in-terms notice requirements, in the next few weeks. CUNA also continues to work with key congressional offices to narrow the reach of the 21-day rule or extend the compliance date. To view the most recent comment letter in full, use the resource link.


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