Northwest Credit Unions Provide Feedback; NWCUA Issues Comment Letter on Proposed Changes to Funds Availability Act

Credit unions unanimously express concern over proposed reduction of hold timeframes.

Compliance image2/26/2019 

In late 2018, the Consumer Financial Protection Bureau and Federal Reserve System issued a proposed rule that would make several changes to the Funds Availability Act, or Reg CC. The changes included some statutory updates that are required under the law (increasing minimum amount available based on CPI adjustments, for example) and reopened the FRB’s proposal from 2011, which would impact hold timeframes. 

 When a rule is proposed, your Association often reaches out to its member credit unions for feedback so that it can submit an effective comment letter that accurately reflects credit unions’ views. In this case, credit unions answered our call, providing detailed comments regarding the various impacts of the proposed rule.  

The biggest concern, shared by all, related to the proposed reduction of hold timeframes. Northwest credit unions collectively voiced concerns about the risk associated with reduced hold timeframes as the industry continues to see growth in check fraud issues. 

 Credit unions also said that holds are used as a way to not only protect credit unions, but also their members. When deposited checks are returned unpaid, the funds previously credited to the member’s account are deducted and often times the member cannot afford to pay the credit union back.  

This is a very common scenario when a member falls victim to a fraud scheme involving the negotiation of fraudulent checks.  

“Credit unions serve their members and that service includes trying to keep members and their money safe. Reducing the ability for credit unions to help their members mitigate risks doesn’t provide consumer protection—it actually removes a tool that can be used to combat losses,” said Katie Clark, NWCUA Director of Regulatory Affairs and Risk Management.  

 The comment period for this rule has closed, but you can still read the proposed rule here (and the 2011 proposal here) Read your Association’s comment letter here. 

Questions? Contact NWCUA Director of Regulatory Affairs and Risk Management, Katie Clark.