WASHINGTON—The Department of Defense informed has NAFCU that at this time it will not be delaying its Oct. 3 implementation date for credit card compliance under the Military Lending Act rule.
The DoD letter was signed by Virginia Penrod, chief of staff in the Office of the Undersecretary of Defense, who states in the letter that she has been delegated the a
uthority to act on behalf of the DoD. To date, there are no political appointees named to this office, reported NAFCU.
Penrod was responding to a letter sent to the DoD in March from NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt. The MLA rule took effect last October, but it included a one-year limited exemption for credit cards. In her letter, Hunt pointed to a need for more clarity in the rule and urged an immediate extension of the credit card account compliance deadline.
"Credit unions have undertaken considerable efforts to comply with the MLA rule, and they will continue to do so, but the rule's application to credit card accounts presents many unique challenges," Hunt wrote. "These challenges suggest that without substantial additional regulatory clarity, many financial institutions will struggle to offer MLA-compliant products. For this reason, we request that the Department immediately exercise the authority it reserved in the MLA rule and extend the exemption for credit card accounts for a full year, until October 3, 2018."
NAFCU said that the DoD's response notes that the final rule, as written, was sensitive to feedback from the financial services industry through its "exclusion of bona fide fees and the option of asserting safe harbor for reasonable bona fide fees."
NAFCU has met with representatives from the DoD numerous times on credit-union-specific issues and concerns about MLA compliance. The association also sent a letter in May with recommended guidance text and signed onto a letter in June with a coalition of trade associations urging an extension of the credit card compliance date. The association said it will continue to push for more clarity in the form of guidance or revisions to the regulatory text for the industry.