LOUISVILLE, Ky. (2/4/16)--The Consumer Financial Protection Bureau (CFPB) should continue to allow credit unions to shape their products to the needs of its members in future rulemakings, the Credit Union National Association (CUNA) said Wednesday in response to a bureau field hearing.
The hearing followed the CFPB’s Wednesday communication urging the 25 largest financial institutions to have more options in checking accounts.
“For over 100 years credit unions have offered more choices and different account options to help consumers manage their spending,” said Ryan Donovan, CUNA’s chief advocacy officer. “While we are pleased with today’s encouragement from the CFPB, we hope that the agency recognizes that placing regulatory burdens on credit unions inhibits their longstanding work in this area and ability to expand service offerings.”
Speaking at the field hearing, Sandy Gogan, senior vice president of retail operations of Park Community CU, Louisville, Ky., shared the credit union experience regarding member service and checking accounts.
“One of the things we have done, and credit unions in general are good at, is educating our members on ways to avoid fees and ways to not have fees,” Gogan said. “The accounts we offer for the underbanked are just part of the credit union philosophy of 'people helping people' ... the mission we have is to make sure our members are successful.”
Gogan described a number of ways Park Community CU tailors its products and services to meet the needs of members, including financial literacy initiatives and accounts designed to help members establish and build credit.
The bureau sent two communications early Wednesday morning, one suggesting a new kind of checking account intended to reach unbanked consumers. The other addresses compliance issues associated with furnishing information to consumer reporting agencies.
During his remarks at Wednesday’s field hearing, CFPB Director Richard Cordray criticized overdraft services, though the CFPB’s own data shows consumer complaints against such services remain very low.
“Director Cordray’s criticism of overdraft protection is contradicted by his own agency’s data, which clearly illustrates that last year only 1.5% of consumer complaints pertained to overdraft,” said Donovan.
During her testimony, Gogan said she believes overdraft services can be used as a member service.
Also during the hearing, Cordray gave remarks apparently agreeing with credit union concerns about the necessity of contacting members on their cell phones about important account updates.
“Director Cordray’s recognition of the importance of communicating with consumers through texts is an important first step,” Donovan said. “We hope the CFPB will coordinate with the Federal Communications Commission, which recently made it more difficult for credit unions to do so in the Telephone Consumer Protection Act order.”
After the field hearing, the CFPB also held a credit union roundtable. During the roundtable, representatives from credit unions and the Kentucky Credit Union League met with Cordray, Deputy Director David Silberman and other CFPB staff members.
During this discussion the group discussed checking account issues, and the risks that financial institutions take when offering them. There was also a lengthy discussion about credit union consumer education efforts.