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News Now

Washington
CFA asks Fed to extend CUs open-end credit deadline
WASHINGTON (8/12/09)—The Consumer Federation of America (CFA) Tuesday has sent letters asking that credit unions be granted more time to comply with the 21-day Credit CARD Act notice requirement for open-end plans other than credit cards. The CFA sent the letters at the urging of the Credit Union National Association (CUNA) after multiple discussions with CFA. CFA noted that a Federal Reserve Board rule intended to implement a section of the Credit Card Accountability, Responsibility and Disclosure Act--or Credit CARD Act--would affect a unique product "offered by credit unions." That section of the Fed rule requires that a creditor may not treat a payment on any open-end plan as late unless the creditor has adopted reasonable procedures to ensure that periodic statements have been mailed at least 21 days prior to the due date. In similar letters to the Fed and to Senate Banking Committee Chairman Christopher Dodd (D-Conn.), the CFA said the primary focus of the 21-day notice requirement is credit card issuers and added regarding the application of the 21-day rule to credit cards, that it is “a very important provision that will help consumers who responsibly pay their bills avoid unjust late payment fees.” However, the CFA noted to the regulator and the lawmaker that the provision will also affect other forms of open-end credit, “including multi-featured credit plans with sub-accounts that credit unions have been permitted to offer for decades. “We believe that the credit unions have identified legitimate implementation difficulties for a complicated and useful product that was not the primary focus of this requirement,’ the letter said. It added: “CFA has worked with credit unions closely over the years, and we know that they will make every effort to comply with this provision as quickly as possible.” The Credit Union National Association (CUNA) has warned that applying a brief compliance timeframe to a complicated and entailed compliance process could present insurmountable problems for credit unions, and CUNA President/CEO Dan Mica late last month encouraged credit unions to communicate their concerns regarding the issues surrounding the CARD Act with the Fed. While CUNA is working with the Fed to delay the current compliance date of Aug. 20, it has also created a compendium of information to help credit unions tackle many of the compliance challenges that lay ahead. To see the CUNA compliance guide, use the link.


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