GAC Recap – Compliance Perspective by Amy Kleinschmit, Chief Compliance Officer
While attending the Governmental Affairs Conference (GAC) in Washington, DC earlier this week, I had the opportunity to learn from a number of industry experts regarding compliance issues that credit unions should be taking note of.
In the breakout session, What’s New on the Litigation Front? – panel experts discussed trending litigation risks. Credit unions need to know the risks so they can be prepared for what’s coming.
These litigation risks include overdraft class actions, military lending act, and GAP waiver refund litigation. ADA website accessibility lawsuits are also starting to pick up frequency again, with 100 lawsuits filed since November 2021.
In regard to notices, disclosures and agreement – attendees were reminded that these documents should inform your members what you are going to do, and then credit unions need to follow those documents. To that end, have you reviewed your notices, disclosures and/or agreements lately? Are they consistent with your current practices?
Another potential risk is COVID litigation, which is an area where we could see lawsuits for years to come. Between March 12, 2020 and now there have been over 5,000 COVID related lawsuits, and of those, 600 are class actions.
Employment lawsuits are a trending litigation risk that employers should also be mindful of. Proper training of managers is key and be sure to review your staff/employee manual. Finally, don’t forget remote workers – if you have an employee working in another state, that state’s rules/laws apply.
Other trends include lawsuits relating to Fair Credit Reporting Act, fraud, and state privacy rules. Credit unions should be paying attention!
The breakout session, Insight on Alexandria: Behind the Scenes at NCUA – provided attendees with insights on how NCUA operates and what is expected from the agency in 2022. The panel was made up of former NCUA professionals, including Buddy Gill, Mark Treichel and Robert Fenner. Mr. Gill provided an overview of the NCUA structure and 10 things that attendees may not know about the NCUA, such as, NCUA board members cannot talk to each other about policy matters unless in the board meeting as it would violate the Sunshine Act. Closed board meetings are used to discuss credit unions that are about to be conserved or personnel matters. The NCUA itself has a number of rules/regulations that it also must follow!
Panel members reminded credit unions that COVID funds are available for qualifying small businesses, which includes credit unions with less than 500 employees. Credit unions are encouraged to review the criteria to determine if they qualify for these COVID funds. Mr. Fenner also discussed the need for new credit union charters as it is critically important to the future of the industry. However, he discussed the biggest hurdle is capital requirements.
The Panel discussed the two documents that credit unions need to review – the NCUA staff draft budget (as this can tell credit unions what to expect in the upcoming year) and the supervisory priorities. For 2022, there were 11 supervisory priorities; credit unions should expect review of payment systems, loan participation, and capital accumulation (if over $500 million) to be top of the list for examiners when they review this year. Additionally, the fact that NCUA is adding payment exam specialists indicates that this is going to be an ongoing focus.
It was also emphasized the benefits of recording NCUA exam meetings. (Remember, this only applies to NCUA meetings, not North Dakota DFI). Recording the meeting can provide better notes on what happened/what was said. This was also touched on by NCUA Vice Chairman Hauptman in his remarks that were made earlier during the GAC conference.
In the breakout session, New Sheriff in Town: What to Expect From the CFPB Under Director Rohit Chopra – panel experts discussed what credit unions can expect under Director Chopra’s leadership in the areas of rulemaking, supervision and enforcement.
Things to watch for – focus on large tech companies and focus on fair lending. The panel experts also anticipate an increase in enforcement actions. Enforcement staff at the current CFPB are taking a very aggressive approach.
A concern is that the current CFPB does not appear to be very responsive to outsiders. CFPB does not appear to have any check and balances within the organization – it is being made up of like-minded people.
Another note made by the panel was that recent press releases seem to be very politically motivated. CFPB is not being consistent – current leadership at the CFPB is setting itself apart from prior administrations.
The panel suggested reviewing of the supervisory highlights that the CFPB publishes. These supervisory highlights shed light on what CFPB examiners are finding when they conduct their reviews, which in turn can provide a road map on what to expect from other regulatory agencies.
Finally, the panel experts shared their concern with the recent Request For Information on “junk fees.” The CFPB pre-judged fees which can create future challenges.
In closing, the GAC provided many opportunities for compliance folks/geeks to get some great insights on what credit unions can be expecting in the future in terms of these regulatory agencies and litigation risks. If you have any questions, don’t hesitate to contact me.
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