TALLAHASSEE, Fla. (10/21/15)--The League of Southeastern Credit Unions (LSCU) continues to work with the Florida Bar Association in an effort to change the Rules of Professional Conduct so that credit unions will be able to open Interest on Lawyer Trust Accounts (IOLTAs).
On Oct. 15, the association took a first step to changing its rules when the bar's Disciplinary Procedures Committee voted unanimously to change the rule.
The proposed amendment will go to the board of governors in December for first reading, and a vote by the full board will be at the end of January. The petition to the Florida Supreme Court will be filed in autumn of 2016.
Currently, attorneys can only use banks for IOLTAs, due to previous concerns over insurance coverage.
Last December, President Barack Obama signed the Credit Union Share Insurance Fund Parity Act, which creates deposit insurance parity for credit unions. The act directs the National Credit Union Administration to extend share insurance coverage to trust accounts, including IOLTAs and other similar accounts opened and managed by credit union members.
With the change in law, LSCU petitioned the Florida Bar to change the rules to allow credit unions to accept these accounts (News Now Sept. 2).
The NCUA also has proposed a rule that would bring agency regulations in line with the law passed last December granting share insurance coverage to IOLTAs; however, the law also allows for coverage to be extended to “other similar escrow accounts,” a term that is not defined in the law.
CUNA, in a comment letter, said the NCUA proposal fails to achieve full insurance parity with the Federal Deposit Insurance Corp.