WASHINGTON—The Department of Defense is being told that there are the compliance challenges associated with the DoD's explanation of guaranteed acceptance protection (GAP) insurance housed within the Military Lending Act (MLA) rule.
This insurance is addressed in question-and-answer No. 2 from the DoD's 2016 interpretive rule amendments released last month.
NAFCU President and CEO Dan Berger and Defense Credit Union Council (DCUC) President and CEO Anthony Hernandez Wednesday wrote to the DoD Wednesday sharing those concerns, asking that the DoD rescind the question from its interpretive rule and the subsequent amendments due to the confusion it has created for credit unions and their third-party vendors.
"Credit unions, especially those with fields of membership closely tied to the service branches and/or military facilities, have a strong commitment to ensuring servicemembers have access to high-quality financial products and services," Berger and Hernandez wrote. "However, the compliance challenges presented by the MLA Rule are substantial and many credit unions continue to grapple with the parameters of the rule due to ambiguous regulatory text and muddled guidance.”
Since the MLA rule was enacted in 2015, credit unions have faced numerous challenges, including finding ways to better understand the rules interpretive language and ensuring that third-party lenders are compliant, NAFCU noted.
The letter also reiterates credit unions' commitment to protecting servicemembers and their families from financial exploitation, and the substantial efforts the industry has already undertaken to comply with the MLA rule.