WASHINGTON—The Consumer Financial Protection Bureau’s remittance transfer exception is too low and unintentionally harming consumers by forcing providers out of the market, according to CUNA.
“We believe the rule has also clearly resulted in unintended harm to consumers,” wrote CUNA in a letter to the Bureau in response to the CFPB’s review of its remittance assessment. “The harm is generally in the form of decreased availability of remittance services and/or increased prices where such services are available. The price increase is due in part to an increase in compliance costs under the current rule as well as a decrease in competition among remittance transfer providers.
“Competition has decreased because of providers intentionally limiting remittance transfers to remain below the safe harbor threshold as well as former providers exiting the remittance market entirely because of its failure to remain economically viable,” the letter adds.
CUNA called for CFPB to raise the safe harbor threshold to entities providing at least 1,000 remittances annually, up from the current 100.
CUNA’s extensive outreach since the rule was finalized has shown a consensus that a “substantial number of credit unions have been forced out of the market due to the compliance resources necessary to continue offering the service.”
A CUNA survey with nearly 500 credit unions with assets ranging from under $5 million to more than $10 billion responding found that over half (55%) of responding credit unions that have offered remittances sometime during the past five years have either cut back (27%) or stopped offering them entirely (28%).
Specifically, between 2014 and 2016, a total of 131 responding credit unions were forced to cease offering remittance services, CUNA reported.
While credit unions with assets of less than $100 million were more likely to have dropped their programs than their larger counterparts, some of the largest credit unions in the country were also forced to make the difficult decision to stop offering remittance services, according to CUNA’s survey.