TALLAHASSEE, Fla. (9/2/15)--The League of Southeastern Credit Unions is working with the Florida Bar on a proposed amendment to Florida’s Rules of Professional Conduct for Attorneys that would remove the state’s ban on Interest on Lawyer Trust Accounts (IOLTA) for credit unions.
The bar’s Disciplinary Procedures Committee is expected to consider an update on its rule, the league said (eSignal Daily Sept. 1).
Currently, credit unions in Florida cannot open IOLTA accounts because the state interprets their share insurance as not covering client funds placed into an IOLTA.
On Dec. 18, President Barack Obama signed the Credit Union Share Insurance Parity Act, which extends the same level of insurance coverage to credit unions’ IOLTAs that the Federal Deposit Insurance Corp. (FDIC) provides for bank IOLTAs. The act paves the way for a change in Florida’s rules, according to the league.
While bank IOLTAs have FDIC insurance providing $250,000 in protection per client per institution, before the law was enacted, the National Credit Union Administration provided coverage of these accounts in credit unions only if the client was a member of the credit union or if the credit union was a low income-designated credit union.
The new law ensures that funds in IOLTAs have the same level of protection in credit unions or banks. Since it was enacted, a number of states have approved or are in the process of approving IOLTA coverage in credit unions. They include: Georgia, Idaho, Iowa, Maine, Michigan, New Hampshire, North Carolina, Pennsylvania, Vermont and Washington.
If the Florida Bar committee approves the change, the proposal must be sent to the Florida Supreme Court for approval. “It appears this process is moving in the right direction,” said the league.