Consumer Compliance Focus for 2020January 7, 2020 3:16 pm
By Donya Parrish, MCU VP- Risk Management
One of the most valuable resources available to prepare for an NCUA (or state) exam is the annual “Happy New Year” letter the NCUA releases in January. The letter was just released and it details exam priorities for the upcoming year and provides a road map of what to expect for focus.
The list this year had many of the usual suspects on it — BSA, cybersecurity, credit risk, and CECL preparation for the 2023 effective date. None of those surprised me given the last few years. What I felt was the heart of the letter though was the discussion of the consumer compliance areas they will be reviewing. Every credit union should take a close look at the topics below and feel comfortable their programs are ready for review.
In discussion consumer compliance focus, the letter states that in 2020, “NCUA examiners are required, at a minimum, to review compliance with the following consumer protection requirements:
- Electronic Fund Transfer Act (Regulation E). Examiners will evaluate Electronic Fund Transfer (EFT) policies and procedures and review initial account disclosures. Examiners will also review compliance with Regulation E’s error resolution procedures for when consumers assert an error.
- Fair Credit Reporting Act (FCRA). Examiners will review credit reporting policies and procedures. If applicable, examiners will also review the accuracy of reporting to credit bureaus, particularly the date of first delinquency.
- Gramm-Leach-Bliley (Privacy Act). Examiners will continue to assess compliance with Gramm-Leach-Bliley to evaluate credit union protection of non-public personal information about consumers.
- Small dollar lending (including Payday Alternative Lending). Examiners will test for compliance with NCUA Payday Alternative Lending (PALs) rules and interest rate cap. In addition, examiners will determine whether a credit union’s short-term, small-dollar loan programs that are not PALs comply with regulatory requirements.
- Truth in Lending Act (Regulation Z). Examiners will evaluate credit union practices concerning annual percentage rates and late charges. These reviews will assess how credit unions apply loan payments to principal, interest, fees and other charges, and whether the application is consistent with the written agreement and disclosures. Examiners will also review whether credit unions appropriately levy late fees. They will also test whether credit unions are accurately disclosing finance charges and annual percentage rates.
- Military Lending Act (MLA) and Servicemembers Civil Relief Act (SCRA). MLA and SCRA have been a supervisory priority since 2017 and will remain so for 2020. For credit unions that have not received a recent review, examiners will review credit union compliance with the MLA and SCRA.”
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