Removing Barriers Blog

BCFP Report on Remittance Rule Released
Posted October 29, 2018 by CUNA Advocacy

The Bureau of Consumer and Financial Protection (BCFP or the Bureau) released its lookback report on the remittance rule.  As a reminder, Section 1022(d) of Dodd-Frank requires the Bureau to conduct these reports within five years after finalizing a major rulemaking. The intent of the report is to evaluate the outcomes of the rule and determine the rule’s effect on the market (intended and unintended).

Here are a few key findings related to credit unions:

The percentage of all credit unions that transfer more than 100 remittances has increased slightly. While a number of banks and credit unions stop transferring more than 100 remittances in each year, about an equal number start transferring more than 100, so the net change is small.

     -The number of credit unions that report offering remittance transfers increased in the two years after the Rule took effect, compared to the two years before, although that increase is likely driven at least in part by changes in the question used to collect these data. Comparable data for banks are not available before the Rule took effect. 

     -Available data sources report that consumers cancel between 0.3% and 4.5% of remittance transfers. Unless the funds are picked up or deposited, the Remittance Rule gives consumers 30 minutes after payment to cancel a transfer, although some providers allow transfers to be cancelled for even longer. Of cancellations that occur within five hours, approximately 70% happen within 30 minutes after payment. There is evidence that some banks or credit unions delay initiating at least some transfers to make it easier for them to provide a refund if a consumer requests a cancellation within the 30-minute period, but the evidence does not indicate how prevalent this practice is.

     -The Remittance Rule contains a safe harbor for entities that provide 100 or fewer remittance transfers in both the prior and the current calendar years. Approximately 80% of banks and 75% of credit unions that offer remittance transfers are below the 100-transfer threshold in a given year. Data analysis suggests that few credit unions that offer remittance transfers constrain the number of transfers that they are willing to provide to stay under the 100-transfer threshold.

     -The statute created a “temporary exception” to allow insured institutions to provide estimated disclosures in certain circumstances. The percentage of banks using the temporary exception has fallen since the Rule took effect. Nonetheless, in their call reports, 11.6% of banks still report using the temporary exception and do so for 10.2% of their remittance transfers. These represent 6.4% of all bank remittance transfers. There is only limited data on the use of the temporary exception by credit unions. The exception expires on July 21, 2020.