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NAFCU Vice President of Regulatory Affairs Ann Kossachev Friday submitted feedback to the CFPB on their request for information (RFI) regarding fees on consumer financial products and services, or "junk fees." The bureau intends to use responses from the RFI to help with "enforcement, supervision, regulatory, and other authorities to create fairer, more transparent, and competitive consumer financial markets."

Kossachev commented that while NAFCU is supportive of the CFPB improving consumers’ understanding of financial products and services, its mischaracterization of fees in the financial services as “junk fees,” “excessive or exploitative fees,” or “inflated or surprise fees,” only confuses and frustrates consumers. Financial institutions, including credit unions, already provide legally required disclosures which have made a positive impact on consumers’ understanding of product fees and pricing. 

“Credit unions do not obscure the cost of their products and services, but rather provide members with a simple schedule of fees or cost recovery schedule disclosure for their products and services at account opening and before a fee-based transaction to ensure the consumer is able to opt-out of that particular transaction, if they so choose.” wrote Kossachev. 

NAFCU urged the bureau to conduct further analysis on the markets and products listed in the RFI before taking any supervisory or regulatory action. Limiting or regulating these programs out of existence can have adverse impacts on credit unions’ ability to serve their communities. The association also encouraged the CFPB to provide greater clarity on existing regulations “to improve access to these services and establish a fairer market that allows consumers to reach their financial goals.” 

Of note, Kossachev also highlighted the following:

• The CARD Act has had a significant impact on limiting credit card fees, which are always disclosed to consumers upfront. The CFPB should evaluate non-depository institutions, such as fintechs, entering the credit card market and utilize its authority to provide greater consumer protections;
• The bureau's own rule imposes such exorbitant expenses and compliance costs to offer remittances, which contribute to high fees. To combat this, the CFPB should explore the potential of digital assets to facilitate faster, cheaper, and safer cross-border payments, but should adopt a flexible regulatory framework; and
• Prepaid accounts and cards, as listed in the RFI are highly regulated. The bureau should not conflate abuses of the compulsory use prohibition with improper disclosure or use of fees in the entire prepaid market.

Kossachev pointed out that mortgages are among the most highly regulated products in the financial services marketplace, with the Truth in Lending Act (TILA), Real Estate Settlement Procedures Act (RESPA), and TILA-RESPA Integrated Disclosures Act (TRID) providing comprehensive disclosures; however, some fees are unavoidable and out of the credit union’s control. The CFPB’s own assessment of the effectiveness of TRID shows that disclosures increased consumers’ understanding of fees. The CFPB should use its innovation policies to further simplify and improve mortgage disclosures. 

View NAFCU’s full letter. Comments on the CFPB’s RFI are due today. NAFCU detailed the CFPB's inquiry and solicited member credit union feedback via a Regulatory Alert; the association will keep members aware of any developing actions from the CFPB.