NCUA appears set to review credit union’s payday loan and payday loan alternative programs on a case by case basis.
The agency sent a letter to federally chartered credit unions in July that laid out the parameters for what would be considered acceptable payday loan alternative programs and which payday loan programs would be unacceptable, mostly because they violated the 18% annual interest rate cap on federally chartered credit unions.
Now the agency has suggested that it will review a credit union’s compliance with the letter credit union by credit union as part of the examination process.
“NCUA evaluates credit union programs, including payday lending, on an individual basis through our risk-focused examination and supervision process,” wrote John McKechnie, director of NCUA’s Office of Public and Congressional Affairs. “This process assesses a credit union’s risk profile and includes new programs such as a payday lending program.”
But McKechnie indicated NCUA may also be open to complaints from consumers or consumer organizations about payday loan programs run by specific credit unions and that such complaints could draw agency review of that specific program.
“In addition to adhering to risk-focused examination and supervision practices, NCUA is responsive to complaints or inquiries from consumers. Upon receipt of a complaint, NCUA investigates the issue, determines its validity, and prescribes appropriate corrective action,” he wrote.
“A consumer complaint may result in an onsite review,” he added. “In that event, examiners identify and communicate problems or weaknesses to credit union’s management, who in turn are expected to address NCUA’s concerns promptly. Action a credit union takes in response to NCUA’s direction helps determine if enforcement action is necessary.”
—dmorrison@cutimes.com