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Compliance Update with Amy K by Amy Kleinschmit, Chief Compliance Officer NCUA – PCA Rule The National Credit Union Administration (NCUA) recently issued an interim final rule, found here, to provide temporary regulatory relief as it relates to prompt corrective action (PCA). This interim final rule is very similar to the May 2020 interim final rule approved on the same topic in response to COVID. As explained in the press release announcing this interim final rule, “We get it. We understand what’s happening right now,” said Vice Chairman Kyle S. Hauptman. “As credit unions continue to support their members during this difficult time, many are concerned with the challenges they will face if their net worth ratio drops below the well-capitalized level. While the latest round of stimulus is good news for many Americans, these payments accelerate the trends of unprecedented share growth in the last year. Temporarily providing relief from prompt corrective action requirements will allow credit unions to stay focused on serving members.” This interim final rule will remain in place until March 31, 2022 and was effective April 19, 2021. Comments must be received on or before June 18, 2021. Section §702.201(b) sets forth prompt corrective action for “adequately capitalized” credit unions. Specifically, providing that upon written application received no later than 14 days before the quarter end, the NCUA Board, on a case-by-case basis, may permit a credit union to increase the dollar amount of its net worth and quarterly transfer an amount that is less than the amount required under this section. As discussed in the summary of this rule, “In response to the COVID-19 pandemic and resulting economic conditions, the Board has determined that it is appropriate to temporarily amend § 702.201 to provide the Board express regulatory authority to issue a single order waiving the earnings-retention requirement for all FICUs classified as adequately capitalized while this temporary rule is in effect.” The order will be applicable to adequately capitalized FICUs and will grant relief from the earnings-retention requirement without requiring those FICUs to submit applications and receive individual waiver approvals, subject to the qualification previously noted in this section. Section §702.206(c) sets forth the contents for net worth restoration plans (NWRP). The interim final rule provides that a Federally Insured Credit Union (FICU) may submit a significantly simpler NWRP to the applicable Regional Director noting that the FICU became undercapitalized as a result of share growth. As explained in the interim final rule, “Specifically, a FICU would be required to attest that its reduction in capital was caused by share growth and that such share growth is a temporary condition due to the COVID-19 pandemic and congressional actions to provide stimulus through direct payments to taxpayers. Federally insured, state-chartered credit unions must comply with applicable state requirements when submitting NWRPs for state supervisory authority approval.” CFPB – Debt Collection Interim Final Rule The Consumer Financial Protection Bureau (CFPB) issued this interim final rule and additional compliance resources, found here, to address certain debt collector conduct associated with an eviction moratorium issued by the Centers for Disease Control and Prevention (CDC) in response to the global COVID-19 pandemic. The interim final rule requires that debt collectors provide written notice to certain consumers of their protections under the CDC eviction moratorium and prohibit misrepresentations about consumers’ ineligibility for protection under such moratorium. The effective date of this interim final rule is May 3, 2021. This interim final rule applies to debt collectors, as that term is defined in the Fair Debt Collection Practices Act. The FDCPA generally provides that a debt collector is “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” CFPB – Debt Collection Rules Proposed Delay The CFPB has also issued a proposed rule to delay the effective date of their two rules related to Debt Collection Practices (Regulation F). This proposed rule can be found here and comments are due May 19, 2021. Both Debt Collection Practices rules have an effective date of November 30, 2021, and the proposal would delay these rules until January 29, 2022. As summarized by the CFPB, the first debt collection final rule, released on October 30, 2020, addresses, among other topics, communications in connection with debt collection and prohibitions on harassment or abuse, false or misleading representations, and unfair practices in debt collection. The first final rule also addresses the use of newer communication technologies in debt collection and establishes record retention requirements. The second debt collection final rule, released on December 18, 2020, focuses on debt collection disclosures and addresses, among other topics, the information that debt collectors must provide consumers at the outset of collections communications. The second final rule also prohibits debt collectors from bringing or threatening to bring a legal action against a consumer to collect a time-barred debt and prohibits debt collectors from furnishing information about a debt to a consumer reporting agency before the debt collector takes certain actions to contact the consumer about the debt. The Debt Collection Rule covers debt collectors and debts, as those terms are defined in the FDCPA. Thus, the Rule does not alter which debt collectors and debts are covered under the FDCPA. For example, the Rule does not expand coverage to first-party debt collectors that are not debt collectors under the FDCPA. Coming Soon – the all new CUPolicyPro! For many years, CU PolicyPro has been an industry leader in providing model policy content. Their compliance content team is second to none! Now they are going to let their programming team take the spotlight as they work on a complete rebuild of the CU PolicyPro system. The all-new CU PolicyPro will continue to provide the great model policy content you’ve come to expect but will now offer a fully redesigned policy management system! The new system includes a beautiful, modern, and easy-to-navigate design to help all users easily find, view and print both model policies and the credit union’s own customized policies. System admins and policy editors will now have a whole new toolbox to create, maintain and distribute policies, assign and track policy updates and reviews, upload and share additional documents, view and confirm relevant model policy updates, and manage user access to the policy level. CU Policy Pro will be contacting credit union users directly in the coming weeks regarding the conversion process and what comes next. As always, feel free to contact Amy Kleinschmit at akleinschmit@dakcu.org with any compliance related questions.
Compliance Update with Amy K
by Amy Kleinschmit, Chief Compliance Officer
NCUA – PCA Rule
The National Credit Union Administration (NCUA) recently issued an interim final rule, found here, to provide temporary regulatory relief as it relates to prompt corrective action (PCA). This interim final rule is very similar to the May 2020 interim final rule approved on the same topic in response to COVID.
As explained in the press release announcing this interim final rule, “We get it. We understand what’s happening right now,” said Vice Chairman Kyle S. Hauptman. “As credit unions continue to support their members during this difficult time, many are concerned with the challenges they will face if their net worth ratio drops below the well-capitalized level. While the latest round of stimulus is good news for many Americans, these payments accelerate the trends of unprecedented share growth in the last year. Temporarily providing relief from prompt corrective action requirements will allow credit unions to stay focused on serving members.”
This interim final rule will remain in place until March 31, 2022 and was effective April 19, 2021. Comments must be received on or before June 18, 2021.
Section §702.201(b) sets forth prompt corrective action for “adequately capitalized” credit unions. Specifically, providing that upon written application received no later than 14 days before the quarter end, the NCUA Board, on a case-by-case basis, may permit a credit union to increase the dollar amount of its net worth and quarterly transfer an amount that is less than the amount required under this section. As discussed in the summary of this rule, “In response to the COVID-19 pandemic and resulting economic conditions, the Board has determined that it is appropriate to temporarily amend § 702.201 to provide the Board express regulatory authority to issue a single order waiving the earnings-retention requirement for all FICUs classified as adequately capitalized while this temporary rule is in effect.”
The order will be applicable to adequately capitalized FICUs and will grant relief from the earnings-retention requirement without requiring those FICUs to submit applications and receive individual waiver approvals, subject to the qualification previously noted in this section.
Section §702.206(c) sets forth the contents for net worth restoration plans (NWRP). The interim final rule provides that a Federally Insured Credit Union (FICU) may submit a significantly simpler NWRP to the applicable Regional Director noting that the FICU became undercapitalized as a result of share growth. As explained in the interim final rule, “Specifically, a FICU would be required to attest that its reduction in capital was caused by share growth and that such share growth is a temporary condition due to the COVID-19 pandemic and congressional actions to provide stimulus through direct payments to taxpayers. Federally insured, state-chartered credit unions must comply with applicable state requirements when submitting NWRPs for state supervisory authority approval.”
CFPB – Debt Collection Interim Final Rule
The Consumer Financial Protection Bureau (CFPB) issued this interim final rule and additional compliance resources, found here, to address certain debt collector conduct associated with an eviction moratorium issued by the Centers for Disease Control and Prevention (CDC) in response to the global COVID-19 pandemic. The interim final rule requires that debt collectors provide written notice to certain consumers of their protections under the CDC eviction moratorium and prohibit misrepresentations about consumers’ ineligibility for protection under such moratorium. The effective date of this interim final rule is May 3, 2021.
This interim final rule applies to debt collectors, as that term is defined in the Fair Debt Collection Practices Act. The FDCPA generally provides that a debt collector is “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.”
CFPB – Debt Collection Rules Proposed Delay
The CFPB has also issued a proposed rule to delay the effective date of their two rules related to Debt Collection Practices (Regulation F). This proposed rule can be found here and comments are due May 19, 2021.
Both Debt Collection Practices rules have an effective date of November 30, 2021, and the proposal would delay these rules until January 29, 2022.
As summarized by the CFPB, the first debt collection final rule, released on October 30, 2020, addresses, among other topics, communications in connection with debt collection and prohibitions on harassment or abuse, false or misleading representations, and unfair practices in debt collection. The first final rule also addresses the use of newer communication technologies in debt collection and establishes record retention requirements.
The second debt collection final rule, released on December 18, 2020, focuses on debt collection disclosures and addresses, among other topics, the information that debt collectors must provide consumers at the outset of collections communications. The second final rule also prohibits debt collectors from bringing or threatening to bring a legal action against a consumer to collect a time-barred debt and prohibits debt collectors from furnishing information about a debt to a consumer reporting agency before the debt collector takes certain actions to contact the consumer about the debt.
The Debt Collection Rule covers debt collectors and debts, as those terms are defined in the FDCPA. Thus, the Rule does not alter which debt collectors and debts are covered under the FDCPA. For example, the Rule does not expand coverage to first-party debt collectors that are not debt collectors under the FDCPA.
Coming Soon – the all new CUPolicyPro!
For many years, CU PolicyPro has been an industry leader in providing model policy content. Their compliance content team is second to none! Now they are going to let their programming team take the spotlight as they work on a complete rebuild of the CU PolicyPro system. The all-new CU PolicyPro will continue to provide the great model policy content you’ve come to expect but will now offer a fully redesigned policy management system!
The new system includes a beautiful, modern, and easy-to-navigate design to help all users easily find, view and print both model policies and the credit union’s own customized policies. System admins and policy editors will now have a whole new toolbox to create, maintain and distribute policies, assign and track policy updates and reviews, upload and share additional documents, view and confirm relevant model policy updates, and manage user access to the policy level.
CU Policy Pro will be contacting credit union users directly in the coming weeks regarding the conversion process and what comes next.
As always, feel free to contact Amy Kleinschmit at akleinschmit@dakcu.org with any compliance related questions.