Compliance Q&A: Indirect Lending
Who's responsible for providing the risk-based pricing notice?
Q: Who is responsible for providing the risk-based pricing notice in an indirect lending arrangement: the auto dealer or the credit union?
A: The original creditor is responsible for providing the risk-based pricing notice. The original creditor is the person to whom the obligation is initially payable.
In some cases, the auto dealer is the original creditor that extends credit contingent on the ability to assign the loan to a third-party. If this is the case, the auto dealer must provide the riskbased pricing notice.
If the credit union is the original creditor, it will be obligated to either provide the notice or contract with the auto dealer to provide it. If this is the case, the credit union must have policies and procedures in place to ensure the dealer provides the notice in a timely manner.
Q: Can credit unions inform members if their funds have been blocked in accordance with Office of Foreign Assets Control (OFAC) regulations?
A: Yes. The credit union may notify a member that it has blocked (i.e., frozen) funds in accordance with OFAC’s instructions.
The member has the right to apply for the unblocking and release of the funds through OFAC’s licensing procedures. The procedures and application form for unblocking funds are available at treasury.gov (select “resource center” and then “financial sanctions”).