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Compliance Hot topics vetted in CUNA call
WASHINGTON (2/12/10)--Pressing credit union compliance issues, including Truth in Lending (Regulation Z) changes, new overdraft rules, and revamped model privacy notices, were vetted for 90 minutes during yesterday’s Credit Union National Association (CUNA) “hot topics” audio conference. Mike McLain, CUNA’s assistant general counsel, addressed numerous issues regarding the credit card rules that go into effect on Feb. 22, including if under-aged consumers could be given shared-secured credit cards without going through a separate creditworthy analysis, and how allocations of payments must be handled. McLain also reviewed four provisions in the new Regulation Z rules that become effective Feb. 22 that apply to all open-end loans, including the new requirement for a 45-day change-in-terms notice, rather than the current 15 days. McLain indicated he is preparing a lengthy compilation of “Frequently Asked Questions” to address the tremendous number of inquiries CUNA has received about the new Regulation Z rules. The topic that produced the most questions from the audience involved the Federal Reserve Board’s overdraft restrictions that become effective July 1. Valerie Moss, CUNA’s director of compliance information, reviewed the Fed’s restrictions on charging any fees connected with honoring or declining overdrafts triggered by ATM withdrawals or one-time debits without first obtaining the member’s consent. Moss discussed how and when credit unions could send out consent forms for existing accounts, although participants questioned how many members would actually provide consent and worried about the impact on credit union revenue. McLain, on a third topic, reviewed the impact that the Fed’s decision to consolidate its checking processing operations has on complying with Regulation CC, the expedited funds availability rule. With the elimination of “nonlocal” checks, credit unions need to review their new account disclosures and determine whether they need to send a notice by March 29 advising members that check holds at the credit union have been reduced. McLain also discussed why a five-day hold is still permitted for checks deposited in nonproprietary ATMs. Nichole Seabron, CUNA’s federal compliance counsel, discussed the federal agencies’ new “model” privacy forms. Although use of the new format isn’t mandatory, Seabron pointed out that the existing sample privacy notice clauses will be removed from the privacy regulation on January 1, 2011, and therefore credit unions will lose the “safe harbor” of using their current privacy notices. She noted that while the National Credit Union Administration has not said how it will instruct its examiners about usage of the privacy form, credit unions should expect consumer groups to press for use of the new forms by all types of financial institutions to allow consumers to compare privacy policies across-the-board. The CUNA lawyers also provided quick reviews of two new rules implementing provisions of the Fair and Accurate Credit Transactions Act (FACTA) that go into effect later this year, and updates on what is happening with the Internet gambling regulation and the mortgage registration rules. The archived version of the winter 2010 “Pressing Compliance Issues” program should be available today or Monday on CUNA’s website (see “training/audio-conferences”).


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