NCUA Board Seeks Credit Union Comments on Loan Compensation

Existing regulation governing compensation for member loans and lines of credit are outdated.

4/30/2019

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The National Credit Union Administration Board approved one item at its April meeting: an advance notice of proposed rulemaking, or ANPR, on possible changes to the agency’s regulation governing compensation in connection with loans and lines of credit to members — Part 701.21(c)(8). The regulation covers direct or indirect commissions, fees, or other compensation by credit union officials, employees, or their family members in connection with loans made by the credit union.

According to the ANPR, these regulations have generated confusion and are likely outdated, burdensome, and at odds with industry standards. The board is considering modernizing the regulation as part of the agency’s regulatory reform agenda.

The NCUA is particularly interested in the following areas:

  • Providing greater flexibility on compensation plans associated with lending while controlling related risks;
  • Determining loan metrics, such as loan volume, as part of compensation plans; and
  • Defining the structure and understanding industry standards for such plans.

Comments are due to the NCUA within 60 days after the ANPR’s publication in the Federal Register.

Question of the Week

Q: We are starting to offer Remote Deposit Capture (RDC) to our members. Is there some sort of Reg CC deposit availability disclosure we need to provide?

A: Regulation CC does have specific requirements for when credit unions need to provide members with notice that the funds of the deposit may not be immediately available. But Regulation CC does not currently cover Remote Deposit Capture.

This leaves the disclosure agreement that is provided when a member signs up for the service as the document that best describes Funds Availability associated with Remote Deposit Capture.

However, as of July 1, 2018, changes were made to Regulation CC. Included in those changes was a new indemnity provision regarding RDC:

Duplicate Remote Deposit Capture Payments

This new indemnity protects a depository bank that received as unpaid a paper check deposit after the check was previously deposited by RDC at another depository credit union. Under this indemnity, the depository credit union accepting the original paper check will now have the ability to recover a loss from the depository credit union receiving the item through RDC. However, the credit union accepting the check via RDC can limit their losses and prevent an indemnity claim if they require and the member utilizes a restrictive indorsement (“For mobile deposit at XXX Credit Union”). The depositary bank may not make an indemnity claim if the original check it accepted for deposit had a restrictive indorsement inconsistent with the means of deposit.

There is also a new provision that the credit union, by agreement, may allocate liability for losses incurred from subsequent deposits of an original check back to the member that deposited the check via RDC.

Related Links:
FFIEC Guidance– Risk Management of Remote Deposit Capture
12 CFR 229.18

Legal Briefs

Consumer Financial Protection Bureau (CFPB)

CFPB announced a policy change regarding Bureau Civil Investigative Demands, or CIDs. CIDs will provide more information about the potentially applicable provisions of law that may have been violated. 

CFPB issued a request for information on the remittance transfer rule.

CFPB released an updated version of the small entity compliance guide for the Prepaid Rule.


Equal Employment Opportunity Commission (EEOC)

U.S. District Court affirmed the Sept. 30 deadline for EEO-1 Pay Data Submission.


Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of April 26, 2019. The last update prior to this was April 17, 2019.


Questions? Contact the Compliance Hotline: 1.800.546.4465, [email protected].