July 8, ’16 NASCUS Report

CFPB to activate annual privacy notice exceptions

Exceptions to an annual privacy notice requirement for financial institutions under certain conditions, and which implement a change in the law enacted late last year, have been proposed by the CFPB in an amendment to Regulation P. The CFPB proposal implements a statutory change Congress adopted late last year in the “FAST Act.” The proposal amends Regulation P, which itself implements the Gramm-Leach-Bliley Act (GLBA), and which requires, among other things, that financial institutions provide an annual notice describing their privacy policies and practices to their customers. Additionally, financial institutions that share certain consumer information with particular types of third parties are required to provide customers with an opportunity to opt out of this information sharing via the annual notice.

Under the bureau’s proposal, financial institutions would have to meet certain conditions in order to be granted the exceptions from providing the privacy notices. Among the conditions:

  • The financial institution must not share nonpublic personal information about customers except as otherwise provided;
  • The financial institution must not have changed its policies and practices with regard to disclosing nonpublic personal information from those that the institution disclosed in the most recent privacy notice sent.
  • Elimination of the “alternative delivery method” (which allows financial institutions that meet certain conditions to provide an annual privacy notice to customers electronically instead of by U.S. Postal mail).

According to a new NASCUS summary of the proposal, the bureau proposed eliminating the requirement because financial institutions that satisfy the requirements for the alternative delivery method would also satisfy the requirements for the annual privacy notice exception. The summary notes that the bureau believes that in those instances, a financial institution will opt to take advantage of the exception from the notice requirement.

NASCUS summary, CFPB proposed amendments to Reg P (on annual privacy notices)


In another new NASCUS summary, an interim final rule about adjusting for inflation civil money penalties (CMPs) imposed by NCUA is the focus. The interim final rule, issued by the agency at its June monthly board meeting, is required by 1990s-era federal laws that call for the adjustments. The legislation, the summary points out, requires NCUA to review and adjust its CMPs for inflation annually and publish the adjusted penalty amounts in the Federal Register. “While the laws require NCUA to adjust maximum CMP amounts, the legislation does not require that individual CMP assessments be made at the maximum level,” the NASCUS summary states. “Historically, NCUA has never assessed a CMP at the maximum level.”

Comments are due July 21 – although the interim final rule will become effective that date as well. According to the summary, the rule would become effective 18 months after publication of a final rule.

NASCUS Summary: Interim Final Rule/Civil Money Penalties


A letter signed by 42 (out of 44) Senate Democrats urges a vote by the Senate Banking Committee on the pending nomination of J. Mark McWatters – now an NCUA Board member – to be a member of the Export-Import Bank of the U.S. The June 30 letter urges Senate Banking Committee Chairman Richard Shelby (R-Ala.) to reconsider his stated position that the committee won’t take up the nomination. “As you are well aware, Mr. McWatters is a well-qualified, Republican nominee and he deserves to have his nomination considered by the committee for an up or down vote,” stated the letter, adding that failure to move the nomination (which, if approved by the Senate, would give the bank board a quorum to act) “is beginning to have serious, negative consequences for American workers across the country.” However, at presstime, the Banking Committee had not scheduled any votes on the nomination. Further, many Washington observers continue to maintain it is unlikely the nomination – submitted in January by President Obama — will be considered before the elections, if at all.

Dem senators’ letter on McWatters nomination


A bill protecting “good faith reporters” at financial services institutions who properly disclose suspected financial abuse of elders was passed by the House on a voice vote this week. H.R. 4538, the “Senior$afe Act of 2016,” (sponsored by Reps. Kyrsten Sinema (D-Ariz.) and Bruce Poliquin (R-Maine) is aimed at protecting seniors from financial fraud, but also at providing legal cover for financial services employees properly reporting suspicions of such abuse. Under the measure’s provisions, a supervisor, compliance officer, or legal advisor for a covered financial institution (credit union, bank, investment advisor or broker-dealer) who has received training regarding the identification and reporting of the suspected exploitation of a senior citizen (somebody at least 65 years old) would not be liable for disclosing such exploitation if disclosure were made to a state financial regulatory agency or any of the federal financial institutions regulatory agencies, law enforcement agency, or adult protective services agency. Additionally, the disclosure would have to be made “in good faith and with reasonable care.” The provision also frees a covered financial institution from liability for such a disclosure by an individual employed by the institution at the time of the disclosure and when the institution had provided training. “Training,” under the measure, amounts to how to identify and report the suspected exploitation of a senior citizen, and discussion of the need to protect the privacy and “respect for the integrity of each individual customer of a covered financial institution.” Training would have to be “appropriate to the job responsibilities of the individual attending the training.” A similar measure is pending in the Senate.


The 2016 NASCUS State System Summit may yet be three months away, but we’re busily building out the schedule now; in fact, we’ve just added several new sessions to the three-day event, Oct. 5-7 in Chicago. Among those added: Payment systems; Regulatory investigations and fiduciary duties of credit-union directors, officers; Privacy and cybersecurity for credit unions. All of these are, of course, in addition to the 21 hours of sessions, discussions and networking events at the Summit – including these topics: Preparing for the coming wave: FinTech; the changing allowance account: adapting to CECL, or not; Campaign 2016: reshuffling the congressional deck; The new frontier of commercial lending – and much more. All of our sessions and events at the Summit are geared specifically toward state credit unions and regulators – because the Summit is the only annual event focusing exclusively on the nation’s state credit union system. And, if you register by July 31, you’ll save at least $100 on your fee. Check out our program at the link below.

2016 NASCUS State System Summit, Oct. 5-7; Chicago

BRIEFLY: New VT commissioner; job opening; CECL freebie from FASB

Michael Pieciak is the new commissioner of the Vermont Department of Financial Regulation, replacing Susan Donegan who completed her service June 30. Formerly deputy commissioner of the agency’s securities division, Pieciak has practiced law in Vermont and New York, and has public service to Vermonters former Gov. Howard Dean (D) and Sen. Patrick Leahy (D) … The Washington Department of Financial Institutions (DFI), Division of Credit Unions has an opening for a program manager, chief safety and soundness exams; applications are being taken through the end of the month. See the link at bottom for more information … FASB has scheduled a webcast July 21 (1 p.m. ET) on its new “CECL” standard at no-charge (for those who pre-register), focusing on the purpose and scope of the standard, key changes, disclosures, transition and effective date. See the link below for more details, including registration.

NASCUS career opportunities page on nascus.org

Details on FASB July 21 webcast on new CECL standard

Information Contact:
Patrick Keefe, NASCUS Communications, [email protected] or (703) 528-5974

For more information about NASCUS's news and/or public relations, please contact our Marketing and Communications Department.