WASHINGTON (2/3/16)--The World Council of Credit Unions submitted a comment letter to the Global Partnership for Financial Institutions (GPFI) last week, strongly supporting its use of the “concept of proportionality” to limit regulatory burdens on credit unions around the world.

The GPFI released 38 proposed recommendations in a Nov. 15 consultative document, and invited comment from financial institutions.

The GPFI is an multilateral organization formed by the G20 countries, interested non-G20 countries and other stakeholders looking to carry forward financial inclusion efforts at the international level.

The concept of proportionality, as expressed by the GPFI, helps regulators develop regulations that do not create regulatory burdens which make it harder for banks and credit unions to serve financially excluded and underserved consumers.

“We believe that continuing this work stream on the unintended consequences of regulation and their impact on financial inclusion is essential to understanding and promoting financial inclusion. This is because the unintended consequences of regulation that lead to financial exclusion must be understood and reduced,” World Council’s letter reads. “The end result of this process should be regulatory reform that eliminates unreasonable and outmoded compliance burdens on credit unions and similar institutions that promote the financial inclusion of financially underserved people.”

The World Council also urged the GPFI to recommend that international standard setting bodies like the Basel Committee on Banking Supervision develop data protection standards to apply to merchants and other non-financial entities.  World Council noted that merchants and other non-financial entities are the source of most data breaches and, unlike credit unions, merchants and non-financial entities are not typically subject to robust data protection regulations.

The World Council also asked the GPFI to clarify that governmental assessments of financial inclusion should not result in new reporting requirements on credit unions because such reporting requirements would be a new regulatory burden with significant compliance costs that would make it more difficult for credit unions to promote financial inclusion.

In addition, World Council noted, credit unions have no reason to discriminate against their member-owners and have shown no history of doing so.

The World Council’s letter contains recommendations for each of the 38 proposals offered by the GPFI.