Both the Credit Union National Association and the National Association of Federal Credit Unions expressed concern about credit unions’ current ability to access the information necessary to comply with the CFPB’s proposed regulations, Credit Union Times reports.
Credit unions currently use ACH and international wires to send and receive remittance — or long-distance money transfers — while other organizations specialize in remittance transfers through the use of their private networks.
The CFPB’s proposed rules would require credit unions to provide an exchange rate and fee estimate for a pre-scheduled transfer, a receipt 10 days before the transfer is sent and a final receipt for receipt of transfer. The rule would also allow consumers, following the receipt of exchange rate and fee estimates, up to three days before the date of scheduled transfer to cancel the transaction.
The goal of the proposed disclosures is to allow consumers a choice for comparison shopping. NAFCU President and CEO Fred Becker said, however, that consumers who ritually schedule reoccurring money transfers are less concerned with choice and more concerned with simplicity, Credit Union Times reports.
Becker said that not only would credit unions have a hard time managing exchange rate risk for 10 days, but the rule, if it becomes regulation, would necessitate complete restructuring of the way money transfers are offered, a financial and resource burden for non-profit credit associations.
CUNA Senior VP and Deputy General Counsel Mary Dunn said that the rule would mean “unsustainably high compliance costs and legal liabilities” for credit associations, adding that, if credit unions can no longer provide remittance services, it would mean fewer consumer choices and higher fees, according to Credit Union Times.
The CFPB rules extend exemptions to any organization that sends less than 25 remittance transfers per year, but both CUNA and NAFCU advocate raising that minimum. While NAFCU advocates raising the minimum to 600, CUNA suggests that a safe zone should be available for those organizations who receive less than 30 percent of total net income from money transfers.