House GOP calls on CFPB to continue remittance rule exemptions
WASHINGTON — More than a dozen House Republicans are calling on the Consumer Financial Protection Bureau to preserve access to remittance services, arguing they would be endangered if the agency does not extend an exception to its remittance rule for banks and credit unions that is due to expire next year.
In a letter Monday to CFPB Director Kathy Kraninger, 16 Republicans on the House Financial Services Committee led by Rep. Barry Loudermilk, R-Ga., said insured depository institutions should be able to continue to estimate, rather than provide the precise amount, of the exchange rate and certain fees when sending money transfers.
“We believe that allowing insured depository institutions to continue to have the option to estimate the third-party fees and exchange rates in remittance transfers in consistent with the bureau’s mission of protecting consumers,” the lawmakers wrote.
The lawmakers added that if banks and credit unions cannot provide estimates, “many institutions would likely discontinue providing remittance services to their customers because they would be unable to comply with the rule.”
The CFPB’s 2013 remittance rule requires that money transfer providers disclose specific information to consumers including the price of a remittance transfer, the exact exchange rate, the amount to be delivered to a recipient and the date of availability.
An exemption for banks and credit unions under certain circumstances enabled them to simply estimate the exchange rates and certain fees. But the exemption is set to expire in July 2020.
The lawmakers said that remittance services are important tool for consumers looking to transfer funds to relatives or friends abroad, pay bills or tuition internationally, or engage in other transactions. While they note that banks and credit unions make up a “relatively small share” of overall remittance transfer volume, they said they are “often the only option” for consumers seeking to conduct higher-value transactions.
“We ask that the bureau provide any further relief that may be necessary to ensure that consumers do not lose access to remittance services,” the lawmakers wrote.
The CFPB is considering whether to add a small financial institution exception to the remittance rule and is looking into whether it should change a safe harbor threshold that excludes providers of 100 or fewer remittance transfers from the rule.