CFPB Delays Effective Date of Remittance Transfer Rule
On November 27, the Consumer Financial Protection Bureau (CFPB) announced that it intends to make changes to the final rule governing international remittance transfers (Regulation E, Subpart B) and delay the effective date, which was originally scheduled for February 7, 2013. This comes after numerous credit unions, state leagues and national associations voiced their concerns over the rule.
The proposed changes are:
- Situations in which a sender provides an incorrect account number to a remittance transfer provider. The CFPB intends to propose that where the provider can demonstrate that the consumer provided the incorrect information, the provider would be required to attempt to recover the funds but would not be liable for the funds if those efforts are unsuccessful.
Disclosure of third party fees and foreign taxes. The proposal would provide additional flexibility around these requirements, including by permitting providers to base fee disclosures on published bank fee schedules and by providing further guidance on foreign tax disclosures where certain variables may affect tax rates.
- Disclosure of regional and local taxes assessed in foreign countries. The CFPB also plans to propose that the obligation for providers to disclose foreign taxes imposed on remittance transfers is limited to taxes imposed at the national level, and does not encompass taxes that may be imposed by foreign, sub-national jurisdictions.
To accommodate the proposed changes, the CFPB must draft and publish a Notice of Proposed Rulemaking. In order for providers to adjust policies, procedures and automated systems to comply with the changes, the CFPB will delay the effective date of the final rule, which is currently February 7, 2013. The CFPB will extend the effective date of the rule to 90 days after the proposed rule is finalized, so the final effective compliance date is not known at this time.
The Missouri Credit Union Association (MCUA) believes these proposed changes are the result of effective communication of legitimate criticisms of the proposed rule by credit unions (and others) to the CFPB. On September 26, a select group of Missouri credit union representatives met with CFPB Director Cordray and other officials. Among the topics of discussion were the remittance transfer rules. In addition, MCUA, CUNA and others submitted comment letters addressing concerns with the proposed rule.
The new Notice of Proposed Rulemaking will likely be published in December. At that time, the CFPB will solicit public comment. MCUA will respond to ensure Missouri credit unions’ opinions are represented in the debate.Photo Caption: Missouri credit unions leaders meet with the CFPB on September 26.