National Credit Union Administration Chairman Todd Harper said Tuesday in an interview at the Brookings Institute his agency will soon require credit unions with above $1 billion in assets to report data on both overdraft and nonsufficient funds fees separately to the NCUA.
The NCUA director noted that understanding the scope of such fees is an important first step to ensuring equity at credit unions, as such fees tend to fall disproportionately on lower income people.
“This is going to be different from banks,” he noted. “We’re gonna require separately reporting of overdraft fees and nonsufficient fund fees, so you’ll have greater granularity in order to track.”
The top federal credit union regulator noted that such a requirement would apply to over 400 credit unions, which hold roughly 90% of the total assets held by credit unions.
While there has been heightened scrutiny about overdraft and nonsufficient funds fees in the banking industry, credit unions have also faced increasing scrutiny over so-called ‘junk fees‘ for some time. The increasingly online bank and credit union ecosystem means customers can more easily change banking relationships, which has in turn created more pressure among banks and credit unions to offer more competitive fee structures. Harper’s remarks indicate credit union regulators are also considering a regulatory approach to curbing such fees.
Harper also touched on another major fairness issue at credit unions: whether credit unions should continue to be exempt from the Community Reinvestment Act.
The 1977 CRA exempted credit unions because their membership bases were smaller and far more local when the law was drafted, and credit unions were thought to be inherently oriented toward community development. But credit unions have grown dramatically and fields of membership have become increasingly broad in some cases, with two credit unions now serving national customer bases.