CUNA Mutual discusses reg changes at Lending Council

SAN DIEGO (11/4/09)--The era of regulatory change is here to stay, at least for the foreseeable future, which means credit unions should plan accordingly, said William Klewin, associate general counsel at CUNA Mutual Group.

Credit unions need to be prepared for changes in the regulatory environment, said William Klewin, CUNA Mutual associate general counsel, during a breakout session at the 15th annual CUNA Lending Council Conference in San Diego last weekend. (Photo provided by CUNA Mutual Group)

Klewin spoke to attendees during a breakout session, "Practical Steps for Regulatory Compliance for 2010," at the 15th annual CUNA Lending Council Conference in San Diego last weekend. He said the general regulatory environment involving both legislative and regulatory issues requires credit unions to be acutely aware of ongoing changes and their effect on how credit unions do business.

"What you know about, you can plan for," Klewin said.

He stressed the importance of credit unions preparing adequately to deal with regulatory change by knowing what's ahead and incorporating the changes into long-range planning, staffing and budgets.

Challenging economic conditions, and the actions leading to those conditions, have resulted in new consumer-protection legislation regarding credit cards, overdraft protection practices and the proposed Consumer Financial Protection Agency. For credit unions, how credit card applications and solicitations are written are among the more significant changes.

For example, Klewin pointed out that fees assessed for late payments, exceeding credit limit, balance transfers and cash advances must now be disclosed in a table within credit card applications and solicitations. Also, there are new regulations regarding how rates are presented in writing, including specific font size and, in some cases, presented in bold.

"These changes affect all of you who are offering credit cards to your members," said Klewin. "So it's critical you're aware of the new regulations and how soon you need to be in compliance."

Klewin also focused on key regulatory issues at the core of credit union business, primarily new rules for multi-featured, open-end lending included in the changes within Regulation Z. He stressed the importance of offering multi-featured, open-end lending to credit union members despite the Reg Z changes.

"There are a lot of reasons why we care about multi-featured, open-end lending," Klewin said. "It provides a superior member experience because it's convenient, requires less paperwork and is a reduced compliance risk. But more than that, it's a marketplace differentiator for us, consistent with building and maintaining member relationships. And those member relationships translate into increased fee income."

Klewin explained the subtle changes within Reg Z and debunked some common myths about multi-featured open-end lending, adding that the myths "should not be reasons to change from multi-featured, open-end lending."

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