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CUs Asked for Comments on Stored Value Cards

CUNA is asking credit unions for comments on a Federal Deposit Insurance Corp. (FDIC) proposal regarding insurance coverage of funds subject to transfer or withdrawal through nontraditional access methods-things like stored value cards.

The proposal applies only to banks and bank insurance coverage, but it may have an indirect impact on credit unions. Credit unions also can offer stored value and payroll cards, and the NCUA often seeks to maintain parity between its insurance rules and those of the FDIC.

The FDIC proposes to extend its rules regarding ownership of deposits to funds underlying "nontraditional access mechanisms" as well as provide guidance to the public about insurance coverage of these funds, according to CUNA's regulatory team.

Among the issue addressed by CUNA in its comment call to credit unions:

* To what extent do you believe funds in the secondary system should be classified a "deposits"?

* Should the FDIC adopt any specific disclosure requirements on the insurability of stored value cards?

* Are there ways to prevent misleading disclosures for insurability of funds when "pass-through" coverage is not available?

CUNA also asks if credit unions provide a secondary system of stored value or other cards in which they collect funds from cardholders, either forward the funds to a sponsoring company or retain the funds as reimbursement for funds previously paid, but do not hold the funds for cardholders.

CUNA will accept comment until Oct. 24. Comments are due to the FDIC by Nov. 7.

CUNA Regulatory Comment Calls

http://www.cuna.org/reg_advocacy

Copyright Credit Union National Association, Inc. Sep 12, 2005
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