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Non-Bank Regulations to Watch

KAREN M. NEELEY

HE ALPHABET SOUP OF REGULATIONS —Reg B and Reg Z being two of the Big Kahunas—are
just the beginning of the compliance scheme for banks. Furthermore, the FDIC, OCC, Fed and
T state regulators are not the only agencies whose rules impact banks. In this short article, we will
look at some of the other regs and “regulators” that affect banking.

MILITARY LENDING ACT. This federal law provides The Independent Community Bankers of
protections to service members and their de- America has negotiated a settlement with Ac-
pendents with regard to consumer credit. The cess Now, an advocacy group, so that it will not
Department of Defense is responsible for the go after banks with less than $50 billion in as-
rules (finalized July 2015) and for in- sets. But don’t breathe a sigh of relief. There are
The Financial terpretations (most recently updated still other advocacy groups filing suits against
Accounting Standards on December 14, 2017). This protected credit unions, schools and a host of small busi-
Board sometimes group can’t be charged more than 36 nesses. Since there are no official standards
develops rules that percent MAPR—a special rate that in- for accessibility of websites from Department
of Justice, courts have been applying the stan-
cludes fees otherwise excluded from
may make sense with the usual Regulation Z APR calcula- dards in the Web Content Accessibility Guidelines,
regard to publicly tion. Here are some of the latest clar- version 2.0, level AA (goo.gl/W6Re8Z).
traded companies but ifications: The threat level is lessened, but not elimi-
just don’t fit community ▸ Auto-purchase money loans can nated. Consider obtaining a review of electronic
include related items, like extended
banking programs for ADA compliance. Make
bank products and warranties. However, financing cred- sure your vendors have this on their radar screen.
activities. Although it is it-related costs will disqualify the loan
a private, independent for that exception. TELEPHONE CONSUMER PROTECTION ACT. This act
organization, with its ▸ Banks can take a security interest in was intended to cut out unsolicited, automated
checking, savings or other financial ac-
telephone calls using an autodialer. The Federal
authority to set standards, counts by describing a permissible se- Communications Commission is the rule-writer
it is effectively a regulator curity interest granted by the protected for this. One practical problem is that the courts
with great power. borrower. have been very expansive in concluding that
▸ Timely determination of military/ equipment used to call out is actually an auto-
dependent status can be at submission of ap- mated dialer. Also, the protections are extended
plication for credit, within 30 days prior to ap- to text messaging to cell phones.
plication or simultaneously with a transaction. Banks should obtain clear, prior written
The lender may check through the Depart- consent to call cell phones or send text mes-
ment of Defense’s website or through use of a sages. In particular, agreements should speci-
consumer reporting agency. fy whether the consumer consents to calls for
marketing by the bank or by a third party. Don’t
AMERICANS WITH DISABILITIES ACT. The Depart - bury the consent. A best practice is to have it
ment of Justice has taken ADA rule-making separately initialed.
with regard to websites off its agenda. The law Although the initial emphasis was on tele-
requires that places of accommodation be ac- marketing, the FCC has interpreted TCPA
cessible to persons with disabilities. For the broadly so that the exception for existing rela-
blind and visually impaired, many websites tionships will not work to permit a call for debt
are not fully accessible to the reader software collection purposes—even from the original
that they use. While text may be read, images creditor. There is a modest exception for mes-
and other material may not be adequately de- saging to alert consumers to a security breach.
scribed. Although the emphasis has been on
websites, the same issues arguably apply to mo- CAN SPAM ACT. Email marketing is regulated by
bile banking! this 2003 law promulgated by the Federal Trade

6 | THE TEXAS INDEPENDENT BANKER