Ah, the new year-time for a fresh start, a renewed energy, and a resolve to focus more time, energy, and resources on compliance. This year will bring more pages of regulations than ever before in the credit union industry, so we all need to prepare. Someone once told me that odd numbered years tend to be years of change-whether this was great wisdom or an old wives tale, certainly 2013 will be the bearer of change for the credit union community. In the spirit of fresh starts and a renewed focus and energy, let's tackle the Top 13 Compliance Issues of 2013:
#1 Remittance Transfers. We had hoped that the new remittance transfer rules would be resolved by the end of 2012; but alas, December brought a new proposed rule. It's good news for credit unions, however, as the Consumer Financial Protection Bureau (CFPB) is seeking to clarify certain sticking points in the two previously-issued final rules. The Bureau also extended the deadline from Feb. 7th until sometime in spring 2013-Happy New Year!
While this additional clarity and brief hiatus is good news, credit unions must continue to prepare for this change. Review your current international electronic transfer portfolio, communicate with vendors and service providers and determine your staff training needs.
#2 - # 8 Mortgage Rules. The CFPB has proposed a complete overhaul to the mortgage industry with more than 3,500 pages of proposed mortgage rules in 2012. These rules will be finalized throughout 2013 (many of them released in January). The seven mortgage rules to keep your eye on:
* Ability to Repay
* Escrow Rules
* RESPA/TILA Integrated Disclosures
* High-Cost Loans (HOEPA) and Homeownership Counseling
* Mortgage Loan Originator Standards
* Mortgage Servicing (Reg Z and Reg X)
* Appraisals (Reg B) and High-Risk Appraisals (joint agency proposal)
It has been estimated that just one of these rules will require the need for 20 notice requirements. If that's any hint of the regulatory burden credit unions will face this year, 2013 will certainly live up to its reputation as the year of change.
#9 Know Before You Owe. The CFPB's Know Before You Owe program is aimed at simplifying information received by consumers in a mortgage transaction, a credit card agreement and a student financial aid award. While the simplified mortgage disclosure has been incorporated into a proposed rule and the simplified student financial aid shopping sheet is currently being used by major U.S. universities, the credit card agreement will draw some attention in 2013.
#10 Student Loans. The Bureau is spending significant resources to review the private student lending market. In the last six months, the CFPB has:
* Reported to Congress on private student lending
* Launched an online complaint database on the topic
* Issued a Request for Information (RFI) on private student loan complaints
With increasing market penetration, it is likely that greater oversight may soon occur. The good news for credit unions -- the most recent CFPB report to Congress showed very few complaints about credit union servicing and stated that the market could benefit from increased participation of credit unions and small community banks.
#11 Payday Lending and Payday Alternative Loans. In an interesting paradigm, the CFPB is taking a very close look at payday lending, while concurrently, NCUA is seeking to increase participation in short-term, small amount loans under its Payday Alternative Rule. We are likely to see action on this topic from both agencies this year.
#12 Servicemembers Civil Relief Act (SCRA). The CFPB is hot on military issues. With an office dedicated to military families, more active involvement with the Department of Justice (DOJ), and a new partnership with state attorneys general, we will see more examination and enforcement here in 2013. Ensure that your policies and procedures are consistent with regulations and training is provided to employees, in accordance with Interagency Guidance issued by the Prudential Regulators in June 2012.
#13 Pre-paid Cards. For those credit unions in the general-purpose reloadable pre-paid card market, you will need to pay attention to potential new rules likely to be issued in 2013. In May 2012, the CFPB issued an Advance Notice of Proposed Rulemaking (ANPRM) on this issue given the growing market trend in consumer use without comprehensive federal regulation. The CFPB is examining the costs, benefits, and risks to consumers who are using these cards as a stand-in for a traditional checking account. Further action from the CFPB is expected this year.
My advice on how to weather the change that 2013 will bring is start now and recognize the struggle but don't fight the change-rather, use it as a way to differentiate yourself to your members and from the rest of the financial services marketplace.
Lauren Calhoun is regulatory compliance manager with CUNA Mutual Group, Madison, Wis. For info: www.cunamutual.com.