The Massachusetts State Senate passed legislation to streamline regulation of credit unions. In assigning new duties and offering appropriate flexibility to credit unions, the bill ends uncertainty over when and where credits should be considered as legally distinct from banks – some regulations continue to be common to both, while others only affect one group or the other. In a major change, credit union fees would be required to be consistent with banking fees.
The bill, An Act Modernizing the Credit Union Laws, also makes reforms to adjust the industry to the reality of remote work. For instance, the bill ensures that applications for loans may be done electronically and repeals now out-of-date regulations on advertisements and telephone-based customer service. The bill further makes headway into the digital age by updating and expanding online standards as well as critical privacy protections which are guaranteed to the customers of credit unions.
“We have been in need of a modernization of the credit union laws for some time,” said Senator Michael Moore (D-Millbury), Chair of the Joint Committee of Public Safety and Homeland Security. “I think that this is especially true as we find ourselves in a situation where we need to have access to all sorts of services from our homes, as opposed to having to congregate in an office somewhere and putting people at risk during this public health crisis. Therefore, I am glad that we were able to pass this legislation before the end of this session.”
Much of the bill focuses on the appropriate balance between giving credit unions greater financial, technological, and regulatory flexibility, while also maintaining oversight and consumer protection. Credit unions are for the first time given the option to hire outside consultants to determine interest rates. While keeping regulations in place that ensure that Massachusetts credit unions are majority local, the bill allows them to take on a larger geographic role with mortgage loans on properties in nearby states. The Commissioner of Banks and the Commissioner of Administration and Finance are both given roles in oversight of credit unions.
Having passed the Senate, the bill now moves to the Massachusetts House of Representatives for consideration.