CUNA, NAFCU Recommend Clarifications to NCUA Proposed Exceptions to FACT Act Medical Information Rule

ALEXANDRIA, Va.-In recent comment letters responding to an NCUA request for comment, CUNA and NAFCU said they generally approve of the exceptions in the agency’s proposed rule on use of medical information in credit decisions. CUNA suggested that NCUA clarify that state chartered credit unions fall under the agency’s proposal providing exceptions to the general prohibition on using medical information in credit decisions. “State-chartered credit unions will be at a significant competitive disadvantage to federal credit unions, banks, and thrifts if they do not receive the benefits of these exceptions,” CUNA Assistant General Counsel Jeff Bloch wrote. “The information they can obtain and use with regard to transactions related to medical issues will be severely limited, as compared to federal credit unions. Under our system of credit, the more information the creditor has, the better able it is to assess the risks involved, resulting in rates and fees that accurately reflect this risk. If the information is limited, then this assessment will not be accurate.” Bloch added, “This competitive disadvantage clearly raises safety and soundness concerns, which would provide NCUA with the authority to extend the rule to state-chartered credit unions.” If the agency does not feel it can under the law, CUNA said NCUA should work toward legislative change. CUNA also suggested delaying the effective date of the rule to allow time to resolve this issue. The Fair and Accurate Credit Transactions Act outlined certain statutory prohibitions and directed regulators to establish more as needed. NAFCU President and CEO Fred Becker on the other hand was concerned that clarification is needed to provide credit unions the “fullest possible flexibility” in forbearance situations where the credit union is trying to set up an easier payment plan for an ill member experiencing financial strain. “Many credit unions have long histories of working with members when they are in financial difficulty resulting from events such as illness,” he pointed out. “Credit unions often take into account a member’s medical condition to defer scheduled payments or to take other actions to accommodate its members.” The two trade associations otherwise generally supported the exceptions the agency laid out in the proposed regulation. -