Compliance Blog

Posted by Anthony Demangone

The OCC issued a very interesting bulletin recently.

The bulletin describes a strange quirk found within the Regulation Z interim final rule, specifically concerning the 45-day change in terms requirements. As we are all aware, we now must give 45-days notice when we increase the APR or change significant terms on a credit card.  And now members have the right to reject those changes.

However, here's what most consumers don't realize: under the rules, the new rates or terms can be applied to any transaction that occurs more than 14 days after the notice is provided – even if the consumer ultimately rejects the changes. The changes to Regulation Z do not require us to tell members about this fact.

Step in the OCC.  Via the bulletin that is linked above, the OCC is directing national banks to include an additional disclosure to notify consumers of this consequence. The OCC hopes that it will minimize confusion.

Here's the relevant language from the bulletin:

To avoid unnecessary consumer confusion, national banks should include the following (or similar) additional information in 45-day advance notices to alert the consumer, if applicable, to the imposition of the new terms on transactions that occur more than 14 days after the notice is provided, regardless of whether the consumer rejects the changes:

NOTE: Even if you reject this change in terms, the new terms will be applied to any transactions on your account that occur on or after [INSERT DATE].

Now, this is an OCC bulletin, so did does not apply to federal credit unions.  Time will tell whether NCUA moves in this direction.  But you may see compliance article drafted about this, and I wanted to bring it to your attention.  Oh, and nothing would prevent you from voluntarily following the OCC guidance.

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Today, I have the honor of testifying before the House Small Business Committee on the issue of pandemic preparedness.  I will do my best to show how hard the financial services industry, including federal credit unions, has been working on this issue.   With that in mind, here's some good pandemic resources:

• NCUA Letter to Credit Unions 09-CU-13. The letter focuses on hurricanes and the swine flu development.

• NCUA Letter to Credit Unions 08-CU-01. This letter really is the backbone of NCUA's guidance on pandemic issues. 

• NCUA Letter to Credit Unions 06-CU-06.  This was the first piece of pandemic guidance issued from NCUA.
• Part 749, Appendix B.   Don't forget about this new appendix to NCUA's recordkeeping rule.  It touches upon business continuity planning issues.