CUNA appreciates NCUA’s efforts to expand opportunities to provide short-term, small-dollar loans, but does have concerns about the agency’s proposed Payday Alternative Loan (PAL) rule. NCUA proposed the rule May 24, and CUNA submitted its comment letter Monday.
“CUNA would prefer a holistic approach to PAL products that would provide credit unions and consumers with flexibility to tailor short-term, small-dollar loans to their needs, without being overly prescriptive,” the letter reads. “CUNA retains concern over the overall low (9%) representation of credit unions using the existing PAL program, cognizant that the compliance and entry costs often outweigh the potential benefits to consumers. We believe a parameters-based approach would offer greater flexibility for credit unions to engage this market.”
CUNA also noted:
CUNA also adds that, while it believes NCUA has legal authority to incorporate the recommendations suggested herein without a full re-proposal of the small dollar rule, CUNA remains supportive of a re-proposed rule that would overhaul the existing and proposed PAL I and PAL II product lines into a singular PAL program that provides “flexible ranges under which credit unions may tailor small-dollar, short-term lending products according to their regional, market, and consumer needs.”