NCUA Board member wants dedicated consumer compliance exams of large credit unions, invites public comments

Proposal would add 3 full-time staff in 2020

National Credit Union Administration (NCUA) Board Member Todd Harper wants his agency to implement a dedicated consumer compliance exam program for large, complex credit unions, and he’s inviting public input ons the proposal, which would include the addition of three staff positions, in connection with the agency’s 2020-2021 budget consideration, the agency said in a release Wednesday.

“For more than three decades, the NCUA has focused its examination program primarily on safety and soundness reviews,” Harper, the lone Democrat on the three-member agency board, said in Wednesday’s announcement. “This policy worked well when the NCUA oversaw a large number of small credit unions serving a limited field of membership with only a few basic financial products, but today’s credit unions are larger and more complex, with 317 credit unions exceeding $1 billion in assets having 71.7 million members.”

The release states that the NCUA’s current compliance examinations covering consumer financial protection laws in credit unions with total assets of $10 billion or less differ from those of other financial institution regulators. It states that other regulators complete regularly scheduled, risk-focused consumer compliance reviews and assign a separate consumer compliance rating outside of the CAMEL process for institutions under their jurisdiction.

Harper, the release states, noted the NCUA’s approach to consumer financial protection reviews also runs counter to the congressionally mandated mission of the Federal Financial Institutions Examination Council (FFIEC), which works to develop uniform standards and processes across all financial institution regulators.

Harper reportedly wants to add three new full-time employees in 2020 to the NCUA’s Office of Consumer Financial Protection. Those employees would develop and later launch a dedicated consumer compliance examination program for large, complex credit unions, the release states.

The budget justification released Oct. 29 by the agency shows three new FTEs in 2020 – two information systems officers in the Office of Examination and Insurance; and a third position in the chairman’s office “to support the NCUA through strategic outreach and engagement with stakeholders in the credit union system, including credit union management, associations and leagues, and journalists who cover the industry.”

Harper, quoted in Wednesday’s release, says that in light of continued growth among the largest credit unions, “the time has come for the NCUA to evolve its consumer compliance program.” He said he invites “all interested parties” to comment on his proposal during public deliberations on the budget.

Comments on the consumer compliance exam program proposal are due Dec. 2 to BudgetComments@ncua.gov.

RR: Credit union regulator plans $316 million budget for 2020, up about 4% from previous year (Oct. 29, 2019)

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