During the 2021 annual Credit Union National Association’s Governmental Affairs Conference (GAC), NCUA Chairman Todd Harper spoke to (virtual) attendees and warned that the NCUA’s own review of the industry last year found credit unions lacking when it comes to consumer financial protections.
In his remarks, Harper noted (emphasis added):
“In 2020, NCUA examiners completed targeted reviews in all risk-focused and small credit union examinations to evaluate compliance with various consumer financial protection laws and regulations. The NCUA then performed quality control reviews on randomly selected examination reports. We observed several issues suggesting that some credit unions may not be paying attention to consumer financial protection as closely as warranted.”
Harper went onto to say:
“In some cases, the NCUA’s examiners found weaknesses in credit unions’ compliance management systems, which can lead to compliance issues, violations or harm to consumers if not adequately addressed. If left unchecked, issues such as deficient recordkeeping, or inadequate training, or weak internal review or audit processes could lead to heightened risks.”
Harper specifically called out that some credit unions had “notable shortfalls” complying with three key compliance laws: The Fair Credit Reporting Act, the Electronic Fund Transfer Act, and the Truth in Lending Act.
Harper told the audience of credit union executives and leaders:
“Credit unions with Fair Credit Reporting Act problems typically did not establish and implement reasonable written policies and procedures about the accurate reporting of member information to a consumer reporting agency, potentially affecting the credit scores of consumers and their ability to obtain fairly priced credit. Credit unions with Electronic Fund Transfer Act issues typically did not promptly investigate errors or provide complete disclosures, preventing members and consumers from understanding their accounts and leading to expensive fees. And, credit unions with Truth in Lending Act problems typically did not provide complete and accurate disclosures to their members or correctly calculate the finance charge for certain consumer loans, potentially increasing the overall cost of credit for the consumer.”
Mr. Harper’s comments are food for thought for all who believe credit unions need to commit to a level playing field and remain true to their mission.
Mr. Harper’s full comments (including video) can be found here.