WASHINGTON–CUNA said it “strongly objects” to the CFPB’s portrayal of all fees charged by credit unions as “junk fees” and further stated the Bureau is not “vested with the authority” to police “competitiveness” in the financial services market, as the CFPB Request for Information “implies.”
Moreover, stated CUNA, the Bureau also lacks authority establish usury limits or cap fees.
In its comment letter filed in response to a Request for Information (RFI) related to fees by the Bureau, CUNA said the RFI “characterizes a broad range of common fees in consumer financial services as so-called ‘junk fees’ that obscure the true cost of financial services. We strongly object to this deceptive language.”
‘Rebuttals to Assumptions’
In its letter, signed by Alexander Monterrubio, senior director of advocacy & counsel for Consumer Protection with CUNA, the trade group offered rebuttals to what it called the “assumptions” underlying the Bureau’s “blanket criticism of all fees,” including:
- “Credit unions offer services that benefit their members and provide the exact type of relationship banking the CFPB Director has stated he wanted to return to. Credit unions are the original consumer financial protectors.”
- “The financial services market is extremely competitive. Banks, credit unions and financial technology companies (FinTechs) compete every single day, including on fees. To imply consumers are ‘captive’ is simply untrue.”
- “All the fees highlighted in the RFI are subject to rigorous disclosure requirements pursuant to applicable statutes and implementing regulations, many of which are administered by the CFPB itself,” CUNA wrote. “The Bureau is well-aware of these requirements, so to claim that consumers are caught unaware of potential fees or that ‘true costs’ are being ‘hidden’ is misguided.”
- “The Bureau is not vested with the authority to police ‘competitiveness’ in the financial services market, as the RFI implies, nor can it establish usury limits or cap fees. We caution the Bureau against regulatory overreach.”
- “The harm to consumers could be significant should the Bureau move hastily to limit services without fully considering the alternatives available or the potential for unintended consequences,” CUNA stated.
A Reminder for CFPB
In its letter, CUNA noted that the CFPB has levied “substantial criticism” recently at overdraft protection programs, with the trade group adding it would “like to take this opportunity to remind the Bureau that, in accordance with all relevant laws and regulations, a consumer that uses overdraft protection has affirmatively opted- in to the service as part of their account agreement. Credit unions offer overdraft as a convenience and accommodation to a members’ benefit, and members that choose to opt-in often do so for the peace-of-mind these services provide.”
‘Caution’ Urged
CUNA further told the Bureau that credit unions strive to keep their members from turning to the unregulated financial services market to meet their liquidity needs, and that it “cautions” policymakers against taking actions that are intended to severely limit the availability of overdraft programs from reputable, regulated financial institutions.
In the letter CUNA further described credit unions as the “epitome of consumer protection in practice. In contrast to for-profit banks and non-depository providers, credit unions are structured as not-for-profit cooperatives. As part of this structure, credit union members can rely on fair and equitable treatment by their credit union because they have a voice and a vote in its operation. This fairness extends to the fees charged in exchange for services or as a penalty.
“We strongly caution the Bureau against painting a broad picture of fees in the financial services market,” the letter adds. “Many credit unions have specifically designed their fee schedules with members in mind and as a result there is substantial diversity across the industry.”
‘Particularly Disappointed’
CUNA said it is “particularly disappointed the Bureau chose to frame its RFI in a provocative, and plainly untrue, manner by implying that most fees charged for consumer financial products ‘are not subject to competitive processes that ensure fair pricing.’
“On the contrary,” CUNA wrote, “the consumer financial services market is extremely competitive and credit unions compete not only with banks and other credit unions but new providers in the form of fintechs. This competition has not only changed the nature of products offered or common fee schedules, but it has also caused many financial institutions to reconsider their fees in response to market changes. Such pressure to constantly evolve and change one’s approach to offerings would not be present without a competitive process that ensures fair pricing.”
Call for Expansion
CUNA also called on the CFPB to support financial inclusion by supporting changes to federal law that would permit all federal credit unions to serve underserved areas.
The CUNA letter can be found here.
NAFCU also offered similar pushback to the CFPB. The NAFCU letter is here.
Both CUNA and NAFCU joined with the American Bankers Association, American Financial Services Association, Bank Policy Institute, Community Development Bankers Association, Consumer Bankers Association, Housing Policy Council, Independent Community Bankers of America, Mortgage Bankers Association and the U.S. Chamber of Commerce in sending a similar letter expressing similar themes.