Monday marks the end of the comment period for the heavily debated arbitration agreement proposal from the Consumer Financial Protection Bureau, and both CU trade associations are urging the agency to utilize its ability to exempt credit unions.
"Credit unions want to preserve the option to protect from class action lawsuits in the future," said Leah Dempsey, senior director of advocacy and counsel at the Credit Union National Association.
Both CUNA and the National Association of Federal Credit Unions are sounding off regarding their disagreement with the CFPB’s proposed rule.
In its comment letter to CFPB, NAFCU Regulatory Affairs Counsel Ann Kossachev expressed concerns regarding multiple facets of the CFPB’s proposal. "Credit unions are not the bad actors trying to ‘cheat’ consumers that the CFPB’s proposed rule is meant to target," the letter read.
Kossachev claimed the arbitration study conducted by the Bureau is flawed and "presents a skewed picture of class action lawsuits compared to arbitration." Kossachev also suggested the impact on small credit unions was not properly researched and the plans for an online database could pose significant reputational risks for credit unions.
"Public access to potentially sensitive information about a credit union and its operations has the potential to harm credit unions, their members and the financial services industry at large," Kossachev said in the comment letter.
CUNA’s Dempsey said on Monday the rule does not align with the history of arbitration agreements at credit unions. "Few credit unions have or use arbitration clauses compared to other financial institutions in the marketplace," she said.
Dempsey suggested when a credit union is faced with a class action lawsuit the associated costs "come out of the pockets of their members." She also argued higher costs to a credit union will diminish the services offered to members when resources are allocated to weather a lawsuit.
Both groups said a potential arbitration website would benefit frivolous lawyers as opposed to consumers and concurrently cause data and privacy concerns.
New RFI Notice from CFPB
A new Request for Information (RFI) from the CFPB, a cybersecurity webinar and comments regarding next week’s Credit Union Advisory Council (CUAC) meeting are also on the agenda this week.
The CFPB will post an RFI on Aug. 23 requesting comment regarding "Application Forms for Financial Empowerment Partnerships." The Office of Financial Empowerment is tasked with developing strategies to improve financials for low-income and economically vulnerable consumers, including those who are at risk of credit problems, unbanked/underbanked and consumers who are struggling with savings. The Empowerment office started three initiatives to address these concerns: Your Money, Your Goals; Financial Coaching; and Tax Time Savings.
The proposed RFI requests comment on the necessity of the information being collected, the CFPB’s estimates for information collection burdens, ways to enhance the information collection and ways to minimize the burden on institutions.
Comments for this proposal are due on Oct. 22.
Free Cybersecurity Webinar this Week
At 2:00 p.m. EST on Aug. 25, BitSight, NAFCU’s preferred partner for cybersecurity ratings for vendor risk management and benchmarking, will hold a free webinar on "How to Build a Third Party Cyber Risk Management Program." Jake Olcott, vice president of business development at BitSight, will lead the webinar, which NAFCU said aims to provide "tips, techniques and tools you can leverage to make it an efficient and cost-effective process for your credit union."
CUAC Meeting Announced
In addition to appointing eight new members to the CUAC, the CFPB announced the Council’s next meeting for Thur., Sept. 1. NAFCU and CUNA praised the CFPB for their appointments who will serve two-year terms at the council.
"[We] strongly support the concept of CUAC — we are very thankful to credit unions that are willing to share their experience," CUNA’s Dempsey said.
The agenda for the meeting highlights discussions on the topics of youth financial capability and debt collection.
