Compliance Center: DoD Issues Change to Allotment Regulations
December 1, 2014
December 1, 2014
The Department of Defense (DoD) announced a policy change to the military allotment system. The new policy will prohibit service members from using new allotments to purchase, lease, or rent personal property starting on January 1, 2015. The military discretionary allotment system allows service members to automatically direct a portion of their paycheck to financial institutions or people of their choosing.
The new DoD Financial Management Regulation (FMR) will list types of allotments that are prohibited. The list includes, but is not limited to, allotments for payments for or to, or deposits to:
- Appliances of household goods;
- Electronics; or
- Other consumer items that are tangible or movable.
The FMR does not prohibit allotments made to:
- Savings accounts;
- Support for dependents;
- Pay insurance premiums;
- Rents for housing; or
In addition, the new FMR does not affect existing allotments or apply to military retires or DoD civilians.
Compliance Question of the Week
In the state of Washington, can Social Security or SSI payments be automatically accessed and applied/offset by our credit union against an outstanding overdraft protection without specific permission from our member?
Yes, a court decision that governs Washington has held that Social Security benefits can be applied to cover outstanding overdraft protection if the following criteria are met:
- The member signed an account hold agreement that outlined the terms and conditions of your overdraft policies;
- The member established direct deposit of their Social Security benefits into their accounts; and
- The member remained free to close their accounts or to change their direct deposit instructions—this signifies that the member voluntarily agreed that their Social Security benefits could be applied to overdrafts and overdraft fees.
National Credit Union Administration (NCUA)
The NCUA announced that it has updated information about the costs of the Corporate Resolution Program and the NCUA Guaranteed Notes Program.
Consumer Financial Protection Bureau (CFPB)
The CFPB Ombudsman released its third Annual Report to the Director.
The CFPB announced that it will holds its first Research on Consumer Finance conference May 7th and 8th, 2015 in Washington D.C.
Federal Deposit Insurance Corporation (FDIC)
The FDIC announced that it will be holding a teleconference on changes to the mandatory flood insurance purchase requirements.
Federal Reserve Board (FRB)
The FRB published its Semiannual Report on Banking Applications Activity.
The FRB has released the updated version of its Consumer Compliance Handbook.
The FRB released the meeting minutes of its October discount rate meetings.
Office of Foreign Assets Control (OFAC)
OFAC has updated the SDN list as of November 26, 2014. The last update prior to this was November 19, 2014.
Questions? Contact the Compliance Hotline: 1.800.546.4465, email@example.com.
Posted in Compliance News.