Consumer financial protection is a core component of credit union regulation, the board chairman of the federal agency that oversees the institutions said Thursday, and is not at odds with regulation meant to ensure safety and soundness.
Speaking to a credit union conference in Las Vegas, Nevada, National Credit Union Administration (NCUA) Board Chairman Todd Harper said safety and soundness and compliance with consumer financial protection laws do not compete with one another.
“It’s not a zero-sum game,” Harper told the Credit Union Leadership Convention. “Across the banking and credit union systems, the two — safety and soundness and consumer financial protection — go together. And, consumer compliance isn’t just a good principle, it’s good business.”
The regulator asserted that if credit unions did not lead in consumer compliance, the consequences would be striking.
“Imagine the criticism from banks that would occur if the public learned that a credit union engaged in redlining, unfairly limited access to credit for certain populations, or charged abusive and disproportionate overdraft fees,” Harper said.
He added that de-emphasizing consumer financial protection in credit unions and at the NCUA would carry serious harm to consumers, with consequences including consumers paying more for financial products and services, being denied a mortgage to buy a home, and being impeded from wealth building. He asserted it could also lead to class action lawsuits, even for minor compliance mistakes, and reputation risk for the credit unions.
Harper said credit unions should consider the concepts of safety and soundness and consumer financial protection compliance as two sides of the same coin. He added that, to that end, the agency’s supervisory efforts were aimed at creating a more equitable and legally compliant financial system.
The NCUA Board chairman repeated other key regulatory issues he has raised before, including interest-rate and liquidity risks, succession planning and cyber security.