Compliance Blog

I had a nice conversation recently with a compliance professional whose credit union was looking to cut costs wherever possible.  We started chatting about ways to cut costs, and then it hit me.  NSFs! 

With all the information the credit union must provide its members in the periodic statements, is it necessary to send out a notice each time a check bounces on a member's account?  In a word: nope.

There is no regulatory requirement that these notices be sent out. The information must be included on periodic statements, but no separate notices are required. The notices are simply a courtesy to members and may be considered a “best practice” as it provides them with immediate notice that an overdraft or NSF has occurred.   (Be sure to check your own disclosures.   If you have promised your members in your account disclosures that you'll send these NSF disclosures, you're on the hook via contract.) 

Also, there are reputation risk to think about.  Your members may have grown to like these notices.  (Well, at least the ones with NSFs.)  If you take it away, there may be some unhappy members.