Disclosing Risk-based Pricing Will Come at High Cost

ARLINGTON, Va. - NAFCU said it sees significant potential cost increases for credit unions in a plan by the Fed and FTC to implement the risk-based pricing provisions of the Fair and Accurate Credit Act of 2003 (FACT Act). Specifically, NAFCU noted the requirement that a credit union is to provide a risk-based pricing notice if, based on a credit report, it offers or extends credit to a consumer on terms that are materially less favorable than the most favorable terms available to a substantial portion of consumers from or through the credit union. What that will mean in practical terms, said the trade group, are more costs to credit unions for programming or restructuring system applications; revising and developing credit review, approval and denial procedures; developing, producing and distributing the notices; and monitoring for compliance. In addition, said NAFCU, there are also issues related to providing more disclosures to members.  (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com/ http://www.sourcemedia.com/