WASHINGTON (8/17/12)--A group of 32 legislators have urged Consumer Financial Protection Bureau (CFPB) Director Richard Cordray to delay remittance rule implementation until February 2015, and, in the meantime, to study how remittance regulation changes would impact consumers and financial institutions.
The CFPB's final remittance transfer rule, which is scheduled to take effect on Feb. 7, 2013, would require remittance transfer providers to disclose the exchange rate, all fees associated with a transfer, and the amount of money that will be received on the other end. Remittance transfer providers will also be required to investigate disputes and fix mistakes.
The Credit Union National Association (CUNA) and other finance industry groups joined Reps. Blaine Luetkemeyer (R-Mo.) and Yvette Clarke (D-N.Y.) last month to seek support for a remittance rule delay. House Financial Services Committee members David Schweikert (R-Ariz.), Bill Huizenga (R-Mich.), Francisco "Quico" Canseco (R-Texas), John Campbell (R-Calif.), Stevan Pearce (R-N.M.), Steve Stivers (R-Ohio), Frank Guinta (R-N.H.), Bill Posey (R-Fla.), Robert Hurt (R-Va.) and Randy Neugebauer (R-Texas) are among the 30 legislators that have joined Luetkemeyer and Clarke in urging the delay.
The legislators in the letter note that the CFPB's proposed remittance rules "are fundamentally misaligned with the primary way in which financial institutions conduct international transfers today." Consumer access to remittance transfers through credit unions, banks and broker dealers is "in serious jeopardy" as a result of the "nearly impossible compliance challenge that financial institutions must solve by next February," the letter added.
The CFPB's final remittance rules would "impose arbitrary and unworkable requirements" on international fund transfers, the legislators said. Any price certainty and transparency that is created by the remittance rule would come at the cost of higher prices, and reduced availability, they added. As a result, unbanked and underbanked individuals who use remittance services will be forced to rely on services provided by less-regulated financial entities. "Such an outcome is contrary to the important public policy goal of integrating these populations into the mainstream financial system," the letter noted.
The CFPB has provided a safe harbor exemption from the rule for remittance providers that transact 100 or fewer remittances per year. The CFPB indicated at least 80% of credit unions that offer remittance services would be exempt.
CUNA remains very concerned about the safe harbor provisions and continues to encourage the CFPB to increase this safe harbor threshold. CUNA President/CEO Bill Cheney, in a recent discussion with Cordray, emphasized that the remittance rules have not taken effect yet and asked Cordray to discuss remittance concerns with credit unions.