Regulator Updated Guidance and Considerations for Second Wave Planning for Pandemics

Credit unions should work constructively with borrowers and members in affected communities

3/17/2020
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As COVID-19 continues to spread throughout communities across the nation, regulators have provided additional guidance for pandemic planning and assisting members affected by the coronavirus.

The Federal financial institution regulators and state regulators released a statement to encourage financial institutions to meet the financial needs of affected customers and members. Regulators also note the financial institutions should work constructively with borrowers and other customers in affected communities. Prudent efforts that are consistent with safe and sound lending practices should not be subject to examiner criticism.

In addition, the Federal Financial Institutions Examination Council (FFIEC) released an updated version of the Interagency Statement on Pandemic Planning. While the expectations and advice in the statement remain mostly the same, it does provide many links that have been updated or added since the original guidance was issued in 2007.

The FFIEC statement does state, “In addition, while traditional disasters and disruptions normally have limited time durations, pandemics generally occur in multiple waves, each lasting two to three months.”

Many credit unions are actively testing or executing their plans, but some thought should be given to what would happen if there is a second or third wave? In a recent FS-ISAC Sprint Exercise the topic of planning for a second wave was brought up. While no one knows for certain if there will be additional waves, contingency planning is very important. Some key considerations include the following:

  • Implementing lessons learned from the first wave. Once there is a breather, take time to review how well your credit union’s plan and response worked. What could you have done differently? Incorporate those ideas and lessons and make changes to your plan.
  • Consider using “survivors” of the first wave to back up critical functions. While no one knows how the virus could potentially mutate, generally someone who has recovered from a virus has some protection against it. This is how the flu shot works. Individuals who have recovered may be vital in ensuring ongoing operations in case of a future wave.
  • Keeping your recovery plan active.
  • Replenishing protective equipment. While it may be hard today to find any protective gear, that may ease up soon. Once supplies become available, what is the credit union’s plan to restock supplies?
  • Monitoring to determine if or when a second wave will occur. What sources of information are you using to keep informed?
  • Ensuring the credit union is supporting staff that may have lost loved ones or colleagues during the first wave, and/or any subsequent wave.

Question of the Week

Q. Do we have to provide cash advances for non-members, and, if we must, can we charge a fee?

A. Credit unions with Visa and MasterCard operating agreements cannot refuse a cash advance to an individual simply because the person is non-member. As a result, the credit union must provide cash advances to both members and non-members. Visa and MasterCard also both prohibit charging a fee for processing a cash advance.

Legal Briefs

National Credit Union Administration (NCUA)

Agencies Encourage Financial Institutions to Meet Financial Needs of Customers and Members Affected by Coronavirus
Federal financial institution regulators and state regulators encourage financial institutions to meet the financial needs of members affected by the coronavirus. The agencies recognize the potential impact of the coronavirus on members and operations of many credit unions and will provide appropriate regulatory assistance to affected institutions subject to their supervision.

Consumer Financial Protection Bureau (CFPB)

Market Snapshot: First-Time Homebuyers
The CFPB released a report looking at trends regarding the credit characteristics and product usage of first-time homebuyers.

Protect Yourself Financially from the Impact of the Coronavirus
The CFPB has launched a webpage that provides resources for consumers to help plan for the potential impact of the coronavirus, both in the short and long term.

Office of the Comptroller of the Currency (OCC)

COVID-19 (Coronavirus) Information Page
The OCC has launched a coronavirus informational page, which contains information, supervisory guidance, and resources related to COVID-19.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of March 12. The last update prior to this was March 5.

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