by Amy Kleinschmit, Chief Compliance Officer
FREE Training Resource Make sure you are taking advantage of this free credit union resource – did you know the National Credit Union Administration (NCUA) offers a no cost education solution for credit unions? The Learning Management System (LMS) offers educational sessions in the following areas - how the credit union system works; how credit unions are governed; credit union operations; products and services; and building community partnerships. LMS webinars and videos can be viewed by the public. Course materials are available only to credit union employees and volunteers. Be sure to check all webinars and sessions that are available, but to highlight a few:
UCC Amendments - Webinars As previously discussed, North Dakota HB 1082 amended several areas of the Uniform Commercial Code (UCC). You may recall this was an amendment that was also introduced in South Dakota but ultimately vetoed by the Governor. This amendment to the uniform law has been enacted in 8 states so far, and we will most likely see it introduced again in South Dakota at some point. To assist with understanding what these amendments do, the Uniform Law Commission provided two free webinars to explain the amendments – one focuses on digital assets and the second part covers everything else that changed. Both webinars can be found here. The amendments span most of the Articles of the UCC and add a new Article addressing, in part, certain digital assets. Outside of the uniform amendments discussed in the webinars, another amendment to the UCC made in ND came from SB 2392 which amended the definition of “deposit account” as it related to secured transactions. As amended, "Deposit account" means a demand, time, savings, passbook, or similar account maintained with a bank. The term does not include investment property, a United States central bank digital currency, or an account evidenced by a certificate of deposit or an instrument. Compliance Reminder Nothing new, but a reminder that NCUA rules and regulations section 745.13 requires that each insured credit union provide notice to its members concerning NCUA insurance coverage of member accounts. The regulations gives a copy options, namely - place either a copy of part 745 of the rules, the appendix, or one or more copies of the NCUA brochure “Your Insured Funds” in each branch office and main office of the credit union. Copies of these materials shall also be made available to members upon request. As a note, for purposes of this requirement - an automated teller machine or point of sale terminal is not a branch office. If you already have a copy of “Your Insured Funds” in each branch – great, but double check to make sure you have the updated versions and it is not providing outdated information for your members. If you need more copies, or updated copies - consumer related brochures and publications on topics like share insurance coverage, financial literacy and money transfers are available for download on NCUA’s consumer site MyCreditUnion.gov. All brochures may be downloaded free of cost. Hard copy publications can be ordered online from the Government Publishing Office’s U.S. Government Bookstore here. Final Rule – FCU Bylaws (Member Expulsion) During today’s board meeting, the NCUA approved its final rule amending Part 701, Appendix A – Federal Credit Union Bylaws to implement the Credit Union Governance Modernization Act of 2022, specifically provisions to expel members for cause. This rule applies to Federal Credit Unions (FCUs). Prior to the Credit Union Governance Modernization Act of 2022, FCUs could only expel members by a two-thirds vote of the membership present at a special meeting called for that purpose, and only after the individual is provided an opportunity to be heard; or for non-participation in the affairs of the credit union, as specified in a policy adopted and enforced by the board. Under this final rule an FCU member may be expelled for cause by a vote of two-thirds of a quorum of an FCU’s board of directors provided the FCU has adopted the related standard Bylaw amendment. In discussion of the final rule, the NCUA states it “believes the expulsion of members is an extreme remedy that may have the effect of denying individuals access to financial services. In addition, as financial cooperatives, a credit union’s expulsion of a member-owner is a particularly significant action resulting in financial exclusion. Therefore, consistent with certain statements in the legislative history, use of the authority under the Governance Modernization Act should be rare and used only for egregious member behavior.” The final rule can be found here and is effective 30 days after it is published in the Federal Register. To briefly highlight some provisions of the final rule: Amendments are made to Article XIV. Expulsion and Withdrawal, of Appendix A to Part 701—Federal Credit Union Bylaws, where the final rule sets forth the policy for expulsion. As noted above, the final rule adds a third avenue to expel a member, specifically adding – “The third way to expel a member is by a two-thirds vote of a quorum of the directors of the credit union. A credit union can only expel a member for cause and through a vote of the directors of the credit union if it follows the policy for expulsion in section 2.” The final rule details the steps the credit union must take should it wish to proceed under this new process – including providing a written copy of the Bylaw Article or the optional standard disclosure notice to each member of the credit union. Advance notice - If a member will be subject to expulsion, the member shall be notified in writing in advance, along with the reason for such expulsion. The final rule instructs what must be included in said notice, which must include that any complaints related to the member’s potential expulsion should be submitted to NCUA’s Consumer Assistance Center if the complaint cannot be resolved directly with the credit union. The final rule provides that a member shall have 60 calendar days from the date of receipt of a notification to request a hearing from the board of directors of the credit union. If a member does not request a hearing or provide a written submission, the member shall be expelled after the end of the 60-day period after receipt of the notice. If a member requests a hearing, the board of directors must provide the member with a hearing. At the hearing, the board of directors may not raise any rationale for expulsion that is not explicitly included in the notice to the member. After the hearing, the board of directors of the credit union must hold a vote within 30 calendar days on expelling the member. Final notice - If a member is expelled, either through the expiration of the 60-day period or a vote to expel the member after a hearing, written notice of the expulsion must be provided to the member. The final rule also details what must be in this notice. A member expelled under this authority must be given an opportunity to request reinstatement of membership. The final rule also adds definitions and commentary to clarify the scope of this new procedure. The final rule defines, “cause” and “dangerous or abusive behavior.” Expulsion or withdrawal does not relieve a member of any liability to the credit union. The credit union will pay all of the member’s shares upon the member’s expulsion or withdrawal less any amounts due to the credit union. An expulsion of a member pursuant to this final rule shall be done individually, on a case-by-case basis, and neither the NCUA Board nor any credit union may expel a class of members. CFPB Enforcement Action The Consumer Financial Protection Bureau (CFPB) recently announced an enforcement action against Bank of America, which can be found here, citing that the bank committed unfair acts and practices when it charged consumers repeat NSF Fees on transactions resubmitted to the Bank for payment after they were initially declined. The CFPB’s Consent Order stated that from September 2018 until February 2022, the bank generated hundreds of millions of dollars from its practice of charging multiple NSF Fees on represented checks or ACH transactions. The CFPB went on to find that, “Consumers could not reasonably understand that they could be assessed a new $35 fee each time [the bank] declined to pay the same ACH transaction or check. Even if some consumers did understand that Respondent assessed these fees, they still could not reasonably avoid them or otherwise protect their interests against incurring Re-Presentment NSF Fees.” The consent order does note, that if the bank does not pay the merchant or other payee when presented with a transaction for an account with insufficient funds, the bank may— according to the terms of its deposit agreements in effect before February 2022—assess a $35 NSF Fee to the consumer. Thus, even though it appears the bank had disclosed its practice of changing the NSF fee on represented items, the CFPB still took issue with the practice because a consumer could not avoid the because the consumer did not know when merchants would re-present transactions, which could occur as soon as the next day. The CFPB is ordering the bank to redress all affected consumers for all unreimbursed re-presentment NSF Fees, providing not less than $80,400,000 in total consumer redress, in addition to a civil money penalty of $60,000,000 to the CFPB. The Office of the Comptroller of the Currency concurrently issued an order against the Bank separately fining it $60 million. DakCU members may contact Amy Kleinschmit with any compliance related questions. Comments are closed.
|
|
Copyright Dakota Credit Union Association. All Rights Reserved.
2005 N Kavaney Dr - Suite 201 | Bismarck, North Dakota 58501 Phone: 800-279-6328 | [email protected] | sitemap | privacy policy |
|
|
|
|