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In response to the NCUA and CFPB's notices of proposed rulemaking on the role of supervisory guidance, NAFCU Wednesday shared its support of the agencies' commitment to working with other federal banking regulators and clarification of ambiguities stemming from a previous statement.  

As proposed, the interagency rule would codify the interagency statements issued by the federal financial regulators in September 2018, determining that agency guidance does not create legally binding obligations for financial institutions.

"Supervisory guidance plays a critical role in assisting credit unions to shape their practices, policies, and procedures," wrote NAFCU Senior Regulatory Affairs Counsel Kaley Schafer to the agencies. "Transparent guidance provides a more consistent supervisory approach."

NCUA

In the letter to the NCUA, NAFCU reiterated its call and recommendations for a more streamlined and efficient examination process. Specifically, the association's recommendation for expanded eligibility of the extended 18-month exam cycle for all well-run, low-risk credit unions.  

Additionally, NAFCU urged the agency to "establish efficient security protocols to protect the integrity and confidentiality of credit union information in the transfer, storage, and use of confidential information in the context of an exam."

"The NCUA should develop mature cybersecurity controls akin to those required by the Federal Financials Examination Council (FFIEC), to assist credit unions minimize associated compliance and litigation risks surrounding member privacy," wrote Schafer.

In regards to the proposal, Schafer asked the NCUA to provide additional supervisory guidance on examination-related matters for credit unions and to encourage examiners to identify and advise on deficient practices before they rise to the level of a violation or constitute an unsafe or unsound practice.

In line with NAFCU's recommendation to the CFPB, Schafer also encouraged the NCUA to better coordinate resources and expertise with other regulators, including the bureau and state supervisory authorities.

For more on NAFCU's examination-related concerns and suggestions read the letter here.

CFPB

In the letter to the CFPB, Schafer urged the bureau to reconsider its approach to supervision to "better coordinate resources and expertise with other regulators, including the National Credit Union Administration (NCUA) and state supervisory authorities."

Schafer highlighted that credit unions subject to supervision and examination by both the CFPB and either the NCUA or a state regulator have reported experiencing overlapping or consecutive examinations, causing operational burdens.

Schafer also asked the CFPB to refrain from issuing supervisory guidance that adds requirements "not explicitly stated in the regulations or law," and commit to only issuing guidance as a reference tool in the future.

NAFCU will continue to work closely with the CFPB and NCUA to ensure credit unions are provided with necessary guidance and tools to serve their members and reduce operational burdens.