Consumer Reports Rates Credit Unions Higher Than Banks

In an article on banking services in its January 2016 issue, Consumer Reports writes that “credit unions are among the highest-rated services we’ve ever evaluated, with 93 percent of their customers highly satisfied, on average, vs. 69 percent for the four biggest national banks.”  The article suggests several reasons for this higher rating:

• “That satisfaction is driven by good customer service, not surprising when you consider that credit unions are owned and managed by their members.”
• Credit union members “usually have access to free checking, slightly higher interest rates on certificates of deposit, and significantly lower rates for credit card and auto loans.”
• According to research by professors at two major universities, “on average credit union members pay annually only $71 per year for checking while bank customers pay $183.”

Furthermore, in an evaluation of some 90 traditional banks and credit unions, nearly all credit unions were rated as or more highly than the banks.  In fact, large credit unions such as Navy Federal Credit Union, North Carolina State Employees Credit Union, and SchoolsFirst Federal Credit Union each earned a reader score of 94 or 95 while the largest banks received scores ranging from 75 to 81.  These three credit unions, and more than 50 other credit union groups, belong to CFA.

CFA Urges FDA to Prioritize Collection of On-Farm Antibiotic Use Data

CFA is calling on the Federal Drug Administration (FDA) to more closely monitor how agribusiness uses antibiotics. The FDA has requested public input on possible approaches for collecting additional on-farm antimicrobial drug use and resistance data, and CFA joined health, consumer, agricultural, environmental, humane and other advocacy groups to push for action beyond the status quo, which has left the agency largely in the dark with respect to how livestock companies are using important antimicrobial drugs in food producing animals.

In a letter to FDA Acting Commissioner Ostroff, CFA Food Policy Director Thomas Gremillion emphasized the importance of monitoring antibiotic use consumers likely to encounter resistant bacteria on meat and poultry. “Current food inspection rules do not keep meat and poultry tainted with these superbugs off of store shelves, and consumers bear responsibility for neutralizing these food safety threats through strict adherence to safe handling and cooking guidelines,” said Gremillion. “Even highly conscientious home cooks may become seriously ill as a result of cross-contamination.”

The letter points out that consumers’ options for avoiding illness from contaminated meat and poultry are limited at this time. Some studies have found that organic meats are less likely to harbor antibiotic resistant pathogens, but these products often cost much more, and they do not eliminate the risks altogether.  Evidence from countries like Denmark, which have had success in controlling antibiotic abuse in the livestock industry, indicate that  widespread intervention is required. In order to determine the most appropriate interventions to pursue in U.S. agriculture, FDA should collect “ quantitative, comprehensive, ongoing, and unbiased data about the use of medically important antimicrobials on animals,” said Gremillion.

CFA encourages the FDA to begin this process by collecting data from feed mills and from large meat and poultry companies, incollaboration with USDA’s Animal and Plant Health Inspection Service. More data on how companies raising feedlot cattle, poultry, and swine are using antibioticswill allow public health officials to determine how to reduce foodborne illness.

Debt Settlement Industry Pushes Anti-Consumer Legislation

The Ohio Senate Financial Institutions Committee recently held two hearings on SB 226, a bill that would allow debt settlement companies to remove fee caps on “debt adjusting.” During the opponents’ hearing, CFA urged the Committee to oppose the bill, stating that the bill would not be in consumers’ best interest.

“The American Fair Credit Council, the debt settler’s trade association, has made several unsuccessful attempts to dismantle the Ohio Debt Adjuster’s Act,” said Kalitha Williams of Policy Matters Ohio.  “We’ll continue to work with CFA and our other state and national partners to protect Ohio consumers from the industry’s excessive fees and exploitative business practices.”

“While debt settlement companies claim to offer substantial reductions in a consumer’s debt load, they also require consumers to default on all of these debts, resulting in a cascade of problems such as late fees and penalties, debt collection ending in lawsuits and wage garnishment, and far lower credit scores guaranteeing high rates on future loans,” said CFA’s Stephen Brobeck in a letter to the Committee.

Ohio’s current law, the Debt Adjusters Act, prohibits debt adjusters from accepting more than $75 for initial consultation, accepting more than $100 annually for consultation fees or contributions, and charging a periodic fee or contribution more than 8.5 percent of the amount paid by the debtor each month or $30, whichever is greater. In the letter, CFA supported the Act and urged the Committee not to change the pro-consumer law.

“Debt settlement companies take advantage of desperate consumers by offering seemingly magical solutions to financial problems – creditor approval of sharp reductions in substantial debts,” said Brobeck. “But these reductions do not occur unless creditors agree, and they often do not.  Consumers have no way of knowing up front if creditors will agree to a debt reduction or, instead, will impose fees that increase total debt.  For some consumers, the debt settlement company settles some debts, but the remaining debt load balloons as creditors hike fees and interest rates.  Even when debts are settled, consumers are often surprised to learn that they have incurred debt-cancellation income tax liability.”

Industry Alternatives to DOL Conflict Rule Fail to Ensure Best Interest Advice

With industry groups lobbying hard for inclusion of a policy rider attacking the Department of Labor’s conflict of interest rule in an end-of-year spending bill, the House Education and Workforce Committee held a hearing last week on a set of bipartisan principles intended to serve as the basis for a “legislative solution” to the rule. In conjunction with the hearing, CFA released an analysis demonstrating that none of the major financial industry alternatives to the Department of Labor conflict of interest rule meet these basic principles.

“Of all of the proposals that have been offered, the DOL proposed rule is alone in meeting this basic standard of ensuring that retirement investment advice serves the best interests of the recipients of that advice,” said CFA Director of Investor Protection Barbara Roper.

The CFA analysis identifies two key factors that any proposal must meet if it is to provide the assurance that retirement advice serves the best interests of working families and retirees:

• the best standard must apply to the full range of services perceived and relied on as objective investment advice by retirement savers.
• And, to ensure that it is not a best interest standard in name only, it must be backed by restrictions on compensation and other practices that encourage and reward advice that is not in the customer’s best interests.

While each of the alternative proposals takes a slightly different approach, all fall well short on both these key points, Roper said.

“At best, these alternatives would preserve the status quo, but some go further by expanding the existing loopholes that allow financial firms and their ‘advisors’ to evade their fiduciary obligations,” Roper said. Moreover, “none of the proposed alternatives take meaningful steps to address the toxic conflicts that pervade the business models of many financial firms,” she added, and the bipartisan principles introduced by Rep. Peter Roskam (R-IL) and Rep. Richard Neal (D-MA) suffer from the same basic shortcoming.

Predictably, industry groups that have poured millions into a campaign to derail the DOL rule have come out in strong support of the principles. “Members should ask themselves why groups that have clearly demonstrated their interest in preserving the status quo are now coming out in full-throated support for a ‘legislative fix,’” said CFA Financial Services Counsel Micah Hauptman. “The answer is clearly that their preferred ‘fix’ will achieve their goal of a best-interest standard in name only, to the detriment of Members’ constituents who are saving for retirement.”

The fate of the DOL rider remained up in the air as congressional leaders continued their funding bill negotiations this week. “Lawmakers who are sincere in wanting to ensure that retirement advice meets this principle should throw their support behind the DOL effort and oppose any policy riders to delay, defund, or otherwise interfere with the DOL rulemaking process,” Hauptman said.

Top Financial Regulators Address CFA Financial Services Conference

More than 200 attendees at CFA’s financial services conference last week heard keynote speeches from leading federal financial regulators, including: Consumer Financial Protection Bureau Director Richard Cordray; Michael Blume, Director of the Consumer Protection Branch of the U.S. Department of Justice; Antonio Weiss, Counselor to the U.S. Treasury Secretary; and Beth Freeborn, an economist in the Consumer Protection Division of the U.S. Federal Trade Commission. The conference also included general session panels on CFPB Enforcement Agenda, student loan reform, the use of non-driving factors in auto insurance, the impact of technological change in securities markets on investors, and access to mortgage credit. At a breakfast dialogue session, Mark Calabria of the Cato Institute and Aaron Klein of the Bipartisan Policy Center discussed the congressional financial services priorities.