America’s Credit Unions has serious concerns about the CFPB’s proposed rule amending Regulation AA, which would prohibit specific terms and conditions in agreements for consumer financial products or services. In a letter to the Bureau, America’s Credit Unions Head of Regulatory Advocacy James Akin outlined credit union’s concerns with the proposed rule, articulating that the terms which the rule would prohibit are already avoided by credit unions and that the rule would bring “minimal consumer benefit, but significant burdens.”

As drafted, Akin said the rule “would impose significant burdens on credit unions’ contractual flexibility and compliance operations with little corresponding benefit to consumers.” He further emphasized that “existing legal standards and guidance have already proven effective in curbing unfair credit contract terms.”

The letter points out how the rule is extremely broad in scope and largely codifies practices that credit unions already follow. This creates an additional compliance burden for credit unions that is “unnecessary and potentially counterproductive; a principles-based supervisory approach would better accomplish consumer protection goals without hampering credit unions’ ability to serve their members.” 

Read the full letter here.