ANAHEIM, Calif.—Regardless of credit union leaders’ politics, one CU advisor says from a compliance perspective “there have not been a lot of negatives” since President Trump took office in early 2017.

That was the word from Brian Lauer, a partner in the Media, Pa.-based firm Messick, Lauer & Smith, which advises credit unions and CUSOs in all 50 states. Lauer was joined by three of his coworkers on a panel discussing compliance trends during the National Association of Credit Union Service Organizations’ annual conference here this week.

Credit union attorneys from the law firm of Messick, Lauer & Smith spoke during the 2018 NACUSO convention. Standing are Amanda Smith and Brian Lauer, seated are Jennifer Winston and Michael Heller
Credit union attorneys from the law firm of Messick, Lauer & Smith spoke during the 2018 NACUSO convention. Standing are Amanda Smith and Brian Lauer, seated are Jennifer Winston and Michael Heller


“The overall compliance trend since the Republican administration took over [in January 2017] is there have not been a lot of negatives,” Lauer declared. “Either there have been good developments or there has been no activity at all.”

The quartet gave information on numerous compliance trends – ranging from the status of the National Credit Union Administration’s field of membership rule to setting up an international collaboration to social media and website compliance to the tumult at the CFPB.

Lauer said the recent court ruling regarding NCUA’s field-of-membership rule was a “partial win for credit unions and a partial win for bankers,” and noted it is not clear if regulator will appeal.

He also noted that NACUSO’s advocacy committee has been “pushing hard” for CUSOs to be able to originate all types of loans. “It is not clear why certain types of loans have been excluded. NCUA has seemed receptive to what we have to say.”

Coming soon: Website scrutiny
Jennifer Winston reported NCUA has said it will include website reviews in examinations going forward, with a focus on advertising content. She said credit unions need to ensure the use of the new, official NCUA sign and advertising statement, as well as the accuracy of their advertising.

“Social media involves quite a few risks, including reputational,” she said, noting the Federal Financial Institutions Examination Council issued social medial guidance in 2013 that covers “any interactive forms of online communication.”

Winston recommended involving IT, HR and marketing in creating a risk management program that includes policies and procedures regarding the use and monitoring of social media, as well as a “robust” employee training program, and audit and compliance functions that include reporting to the board.

“Social media policy should include how the credit union is going to respond to negative posts,” she offered. “Reputation risks arise from negative public opinion, often involving dissatisfied consumers. Employee communication on social media can open the credit union or CUSO to compliance, operational and reputational risks, as they may be viewed by the public as reflecting your organization’s official policies. Be sure your policies and procedures are updated to keep pace with technology.”

ADA website compliance is a “hot-button issue,” Winston continued, while noting it is not clear the Americans With Disabilities Act necessarily applies to websites. She said circuit courts are split on the foundational issue – is a credit union website a “place of public accommodation.”

“Expect the issue to make it to the Supreme Court sooner rather than later,” she said. “It is listed as ‘inactive on the Department of Justice’s rulemaking site.”

Amanda Smith said headlines on the issue of courts versus regulators are “confusing and misleading.”

“It is not true there are no regulations at all anymore,” she said with a laugh.

One of the stickiest issues involves Federal Communications Commission rules on auto dialers. A 2015 FCC order covered any equipment with the potential future capacity to dial random or sequential numbers. Smith said a new ruling is unlikely to result in significant decrease in litigation in the short term. Aside from the exclusion of smartphones, the court did not define “auto dialer.”

“The FCC will define ‘auto dialer’ in the future, but litigants are left to battle for now,” she appraised.

The Department of Labor’s fiduciary duty rule “has been attacked from all sides,” Smith said. After several delays, the DOL said it will not be enforcing its 2016 fiduciary rule pending further review of the case.

As for the Consumer Financial Protection Bureau, Smith said despite controversy and a court fight between its two dueling acting directors, “The CFPB is not going away any time soon.”

Michael Heller said there are numerous considerations for CUs and CUSOs to take into account before undertaking an international collaboration, starting with cultural considerations. He recommended considering such factors as language differences, time zones, the ability to manage the relationship and different legal systems. In foreign relationships, patents and trademarks must be registered in the various countries, he explained, and there are antitrust laws that may affect sharing of intellectual property.

“Have a written agreement that specifies the intended scope of the relationship, intellectual property protections, confidentiality, and clauses governing non-solicitation/non-compete/exclusivity. Have an exit strategy, including term length and termination provisions that give the ability to terminate,” Heller said.