WASHINGTON—CUNA and NAFCU have each submitted letters in response to a joint proposal issued by the Federal Reserve and Consumer Financial Protection
Bureau that would make amendments to Regulation CC (which implements the Expedited Funds Availability (EFA) Act).
In NAFCU’s comment, Andrew Morris asked the agencies to "consider ways to mitigate funds availability disclosure costs [under the Electronic Funds Availability Act] that will disproportionately impact small credit unions."
Morris, NAFCU's senior counsel for research and policy, provided comments to the agencies on their proposed rule that would introduce a new calculation methodology for adjusting dollar amounts under the EFA Act to account for inflation.
Morris said the proposed methodology for determining the first and subsequent sets of adjustments is consistent with the approach adopted in the EFA Act.
‘Significant’ Costs
"Nonetheless, NAFCU remains concerned that changes to the dollar amounts every five years will have a disproportionate cost impact on smaller credit unions that must print new disclosures to reflect new funds availability schedules," Morris wrote. "For many smaller credit unions, the costs associated with printing and mailing notices to members, including change-in-terms notices, can be significant relative to overall revenues.
"For credit unions that lack the scale to absorb new disclosure costs, transitioning to new disclosures every five years introduces yet another regulatory burden," he added, while also noting the Bureau estimates the proposal will have a "significant economic impact" on a small number of entities.
NAFCU is supportive of the technical amendments to Regulation CC in the proposed rule, Morris said, which clarifies the agencies' joint rulemaking authority and would also implement amendments made to the EFA Act by S. 2155.
In addition, the agencies have reopened comment on the 2011 funds availability proposal originally issued by the Fed, but only with respect to the portions of Reg CC that are subject to their joint rulemaking. Morris argued that the agencies should issue a separate request for information or advance notice of proposed rulemaking to solicit comments on this portion of the proposal, and also that certain changes would introduce additional operational burdens for credit unions that potentially elevate the risk of fraud.
CUNA’s Comment
Regarding the 2011 proposal, CUNA in its comment recommended the agencies “update their research and reissue an amended Funds Availability Proposal that reflects changes in technology, consumer trends, and the greater availability of mobile deposits rather than tying a dated proposal to a tangentially related recent development.”
In addition, CUNA reiterated several points it made in in its original 2011 comment on the proposal, including:
- Highlighting an objection to the proposed decrease in the reasonable additional extension hold
- Encouraging the agencies to continue to work with credit unions and other institutions to obtain data on check fraud to account for changes in counterfeit technology and the payment landscape
- Recommending the agencies provide appropriate data security guidance for the proposed electronic return requirements that is consistent with other data security regulations, which include electronic data and systems to be used by financial institutions
- Recommending agencies provide further clarification, examples and commentary on the “reasonable cause to doubt collectability” hold reason to account for suspected fraud and counterfeit checks
- Recommending the agencies attempt to reduce compliance costs and burdens by minimizing changes to the model forms and disclosures