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FTC disclosure changes should defer to NCUA CUNA
WASHINGTON (6/15/09)—The Credit Union National Association (CUNA) said recently that for non-federally insured credit unions, the Federal Trade Commission should defer to the National Credit Union Administration (NCUA) rule on share insurance signs for shared branching. In February, the NCUA did away with a complicated requirement that shared branches must display a sign listing each federally insured credit union served by the teller along with a statement that only these credit unions are federally insured. The new rule replaces the required list of federally insured credit unions with a statement that not all of the credit unions served by the teller are federally insured and members should contact their credit union for more information. The FTC’s has proposed a rule that would require all financial institutions—including credit unions--that lack federal deposit or share insurance to provide enhanced disclosures to their members or customers through both signage and the distribution of written disclosures. These rules implement provisions of the Federal Deposit Insurance Corporation Improvement Act, as amended in 2006 by the Financial Services Regulatory Relief Act. Under the rule, the FTC would also require financial institutions to obtain signed copies of a disclosure that acknowledges their financial insurance status from all members and customers. At the moment, these disclosures will be collected from all members or customers that joined after Oct. 13, 2006. CUNA, in a recent comment letter to the FTC, urged that existing credit union members be exempted . Forcing existing members to sign these disclosures would not only be a difficult task to complete, but would be a “public relations nightmare” for credit unions. The FTC should also delay the effective date of these new rules to 9 months after the rules is issued to allow the time needed to create the new disclosures and train staff members. Federally insured credit unions are covered by the NCUA National Credit Union Share Insurance Fund. CUNA estimates that around 200 state-chartered credit unions do not currently have federal share insurance, instead opting for private insurance, which must meet these new FTC requirements. For CUNA’s full comment letter, use the resource link below.


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