WASHINGTON—Both NAFCU and CUNA are expressing general support for the Bureau of Consumer Financial Protection's efforts to promote innovation in the financial marketplace, but also say they would welcome revisions to its trial disclosure programs.
The trade associations’ positions were outlined in separate comment letters to the Bureau this week.
In NAFCU’s letter, Andrew Morris, regulatory affairs counsel, asked that the Bureau be mindful of the costs involved in creating new disclosures as he suggested ways to ease any potential burdens.
In September, the bureau proposed creating a "sandbox" under its disclosure trial programs policy, which went into effect October 2013. This policy details the Bureau's process to approve limited-time exemptions for financial institutions from current federal disclosure laws, so they can research and test informative, cost-effective disclosures. However, in the five years the policy has been in place, the Bureau has yet to approve a program.
‘Modest Improvements’
NAFCU previously shared its recommendations regarding how to improve the program, reduce regulatory uncertainty and lower costs for credit unions that wish to develop new disclosures. Following up on those recommendations in light of the Bureau's proposal, Morris said the proposal does make modest improvements to the current process for obtaining a trial disclosure program waiver.
Specifically, Morris pointed out that NAFCU and its members are pleased to see greater clarity on the application review timeframes and extensions of existing waivers. The association requested, however, that if the Bureau issues a formal denial on an application that it provide an explanation as to why. Also, if the Bureau anticipates longer waiver extensions, NAFCU asked for further guidance on this aspect of the policy.
Above all, Morris wrote, the Bureau should consider ways to reduce burden for potential applicants seeking to test new disclosures – especially smaller financial institutions such as credit unions. "NAFCU believes the Bureau can and should do more to make the trial disclosure program more accessible to institutions with limited financial resources," he wrote.
NAFCU Recommendations
Morris offered several ways the Bureau can ease credit unions' burden when they seek to test new disclosures, including:
- Granting credit unions additional flexibility when identifying laws or regulations to be waived in a trial disclosure application
- Providing applicants an opportunity to cure alleged breaches of waiver provisions before revoking the waiver
- Maximizing assurances that the Bureau will not pursue actions against waiver recipients under its unfair, deceptive, or abusive acts or practices (UDAAP) authority
CUNA’s Comment
In its letter, meanwhile, while generally supportive of the Bureau’s policy to encourage trial disclosure programs, CUNA is recommending that any Bureau-approved programs be “narrow in scope and not excessively deviate from traditional disclosure standards.”
The TDP policy outlines how the Bureau, would grant a company a waiver on a case-by-case basis from federal disclosure requirements, in order to allow those companies to test trial disclosures.
In the five years the current TDP policy has been in place, the Bureau has not approved a single one, stated CUNA, adding that shows a lack of interest in the current policy. The proposal was issued to codify several improvements to streamline the application process, provide certainty for approval timeframes and making the Bureau’s liability statement more prominent.
CUNA Recommendations
In the letter, CUNA said it:
- Supports the Bureau’s proposed intention to grant or deny a formal complete application for a TCP within 60 days. The bureau does note that “reasonable requests” for the Bureau could be reconsidered, and CUNA recommended the Bureau provide a timeframe for appeals to be denied or approved
- Supports the provision allowing the Bureau to revoke its waiver should an entity fail to abide by its terms and conditions. CUNA also recommends the Bureau permit entities “reasonable latitude” to fix any violation prior to revocation
- Recommends the Bureau allow entities to file a request for extension of the TDP’s approval for up to 90 days prior to its expiration, rather than the proposed 150 days before expiration
- Strongly supports the Bureau permitting group applications, in which a trade association, vendor or other business could apply on behalf of its members or entities. CUNA said it believes this will increase the likelihood that credit unions would be able to take advantage of the policy
- Recommends the TDP policy clearly state the Bureau’s expectations for a financial institution after the revocation of a waiver, as well as when liability protections are null and void. In cases of good faith but unsuccessful efforts, CUNA said it believes it would be reasonable for the liability protection to end at the point the revocation is effective as opposed to retroactively
- Encourages the Bureau to make protections for participating entities as clear and binding as possible to avoid policy swings based on Bureau leadership or regulatory changes