CU reviews prove need for consumer protection reviews: Harper at GAC
NCUA President Todd Harper on Tuesday stepped up his commitment to bolster the agency’s consumer protection efforts, saying failures found in credit union reviews demonstrated the need for tighter oversight.
“We have observed several issues suggesting that some credit unions may not be paying attention to consumer financial protection as closely as they should,” Harper said at CUNA’s annual government affairs conference, held practically this year.
Harper said that in some cases, reviewers have found weaknesses in credit union compliance management systems.
“Left unchecked, issues such as poor record keeping, inadequate training or weak internal review or audit processes could lead to increased risks,” he said.
Harper last year urged the NCUA to initiate the process of develop a separate consumer protection review for credit unions, such as those managed by federal banking agencies. However, then-president Rodney Hood opposed the proposal. Board member Kyle Hauptman, a Republican like Hood, was not a board member at the time.
Harper said reviewers noted “shortcomings” in credit unions complying with the Fair Credit Reporting Act, the Electronic Funds Transfer Act and the Truth in Lending Act.
He said credit unions with fair credit scoring issues generally do not have written policies regarding the accurate reporting of member information to a consumer scoring agency.
He said credit unions with problems with electronic funds transfer typically don’t promptly investigate errors or provide full disclosures.
And he said credit unions struggling with the Truth in Lending Act typically don’t provide their members with accurate information or accurately calculate finance charges for consumer loans.
“To address these and other issues, especially as the industry becomes more and more complex, the NCUA must create a dedicated program to oversee compliance with consumer financial protection and fair loan laws,” did he declare. “In doing so, we will better protect the interests of consumers, ensure that the credit union system lives up to its commitment to serving members, and provide a level of consumer protection oversight comparable to that of credit union regulators. federal banks. ”
He continued, “NCUA’s efforts to improve oversight of consumer financial protection rules will protect not only members of credit unions, but also all credit unions against reputational risks resulting from the missteps of others. “
On another matter, Harper said he had asked Congress to make permanent changes to the agency’s Central Liquidity Facility. These changes are expected to expire at the end of this year.