WASHINGTON (12/29/15)--The National Credit Union Administration’s (NCUA) final rule on interest on lawyer trust accounts (IOLTAs) was published Monday in the Federal Register, making the rule effective Jan. 27.
The rule, finalized at the NCUA’s Dec. 18 open board meeting, extends share insurance coverage to IOLTAs and other similar trust accounts.
The NCUA was required to pass an IOLTA rule after the Credit Union Share Insurance Parity Act was signed into law in December 2014. Under an IOLTA program, an attorney or law firm may establish an account at a financial institution to hold clients' funds to pay for legal services or other purposes.
While IOLTAs are covered under the NCUA's regulation, the NCUA was also given authority under the law to provide pass-through share insurance for “other similar trust accounts.”
It did not, however, choose to extend coverage to prepaid card accounts in the rule.
“We have little doubt that the law gives NCUA the authority to extend insurance coverage to prepaid accounts, and we are very disappointed that NCUA has not exercised that authority at this time,” CUNA President/CEO Jim Nussle said.