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By Strunk & Associates, L.P.
In our January column, we discussed the ever-evolving regulatory environment surrounding what the NCUA describes as overdraft or bounce protection programs in credit unions. We noted that credit union executives need to stay on their toes and not become complacent in terms of maintaining their proper structure and design.
Let’s take this process a step further and look at your program through the eyes of the examiner. The NCUA prepared a questionnaire that poses real world questions about how your overdraft payment program is structured and implemented. It’s a comprehensive list used to examine these services.
While we won’t cover each and every question in this column, we’d like to pose several so you can put your program to a preliminary test.
Risk Assessment Any program or service should be analyzed and evaluated relative to financial impact. Consider these three questions:
The NCUA Guidance Document covers other areas in detail including disclosure and communication, accounting, third party service providers, reputation and compliance. Let’s take a look at the questions posed.
Disclosure & Communication Six questions frame the properly designed and implemented program from a disclosure standpoint.
Accounting Consider the following when evaluating your program from an accounting standpoint.
Third Party Service Providers Credit unions that employ third party providers to design and implement their bounce protection program are strongly encouraged to conduct proper due diligence on the outsource provider they select. However, the NCUA reminds credit unions that they are ultimately responsible in setting the parameters used to determine whose overdrafts will be paid.
Compliance There are certain fundamentals that every overdraft payment program should conform to.
Many of these questions posed by examiners simply require common sense. Others need more in-depth analysis. If you’re a client of Strunk & Associates, you’ve been provided our responses as well as insights based on years of research and experience. If you’re dealing with another Overdraft Payment Service provider who doesn’t have the answers, consider working with us. Our discretionary Overdraft Privilege Product and our ODP Plus are the best in the industry. They’re also designed to meet or exceed state and federal compliance standards. Call us at 1.800.728.3116 or email us at firstname.lastname@example.org.
This sponsored content article is provided to the credit union community for shared insights and knowledge from a recognized solutions provider in the industry. Please note that the views and opinions offered here do not reflect those of Callahan & Associates, and Callahan does not endorse vendors or the solutions they offer.
If you are interested in contributing an article on CreditUnions.com, please contact our Callahan Media team at email@example.com or 1-800-446-7453.
March 12, 2007
7/26/2012 04:05 PM
The easiest way to avoid scrutiny is to avoid utilizing such products. It''s no wonder that Congress can''t tell a bank from a credit union anymore when credit unions are engaging in predatory lending practices such as bounce "protection"
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