The Consumer Financial Protection Bureau recently commented on an agency rulemaking regarding acceptable business practices and consumer protection standards for financial products and services.
Under the new requirements, financial institutions will have to disclose to consumers the exchange rate, fees, taxes and the amount of money to be delivered to a foreign recipient. Additional documentation requirements include a receipt with disclosure information that establishes when the money will become available to the recipient, HuffingtinPost.com reports.
Transfers must be greater than $15, made from the U.S. and sent to a foreign country. A one year transition period will allow relevant institutions to make changes to comply with the CFPB regulations.
Beginning January 2013, the new rule addresses transfer errors and requires that institutions remedy any error that may occur during a money transfer in a very timely manner, even allowing the consumer to cancel within 30 minutes from the start of the transfer.
The rule is intended to reduce cost and risk to consumers, but the rule does have potential problems, particularly in the disclosure requirement, according to HuffingtonPost.com. While institutions are required under the rule to inform the consumer of the amount to be delivered, it would be difficult, and possibly impossible, for these institutions to comply with that regulation.
A statutory exception to the requirement allows banks and depository institutions to provide only a “reasonably accurate estimate” of the amount to be delivered, an exception that continues into 2015 but could be extended.
The rule also allows for “reasonably accurate estimates” by non-banks for countries where providers are unable to determine the amount of currency to be received due to foreign policies and laws regarding transfers.
A final money transfer rule will accompany the proposal, focused on tying up loose ends in the CFPB transfer regulations.