Combined Periodic Statements

Credit unions looking to save on operational costs often conclude that paper usage could be reduced to make room for their budgets. However, they may be unsure if it is permissible to combine closed-end and open-end periodic statements. Truthfully, I wouldn't be a responsible attorney if I didn't respond to this inquiry with this ancient lawyer proverb: "it depends."

Before we discuss whether combining periodic statements is permissible, you may find it helpful to refresh your memory about periodic statement requirements. Here is a previous America's Credit Unions' blog about periodic statement requirements concerning share accounts. Also, this America's Credit Unions' blog tackles the requirements of Regulation Z's periodic statement requirements for both open-end and closed-end credit. In turn, this blog will help you determine whether the credit union may send a combined periodic statement.

You may find that your members prefer to receive fewer statements from their credit union. Members likely prefer a combined monthly periodic statement because they do not want to receive multiple statements from their credit union throughout the month. As such, a single combined statement that contains information about their loan, checking, savings and other appropriate accounts would be a great benefit for our members. Don't forget that, in compliance with E-SIGN, credit unions can send members electronic statements when members affirmatively consent and opt-in to receive disclosures.

Another obstacle is the competing format requirements of certain statements. The Consumer Financial Protection Bureau (CFPB), in a 2012 proposed rule, called to our attention that sometimes both open-end and mortgage loan statements require information to be written on the first page of the document:

"Based on industry outreach, the Bureau understands that some institutions provide a combined statement for mortgage loans and other financial products. For example if a consumer has both a checking account and a mortgage with a credit union, the consumer may receive a single combined statement. The Bureau seeks comment on how servicers would actually combine statements. In particular, the Bureau notes that difficulties may arise when different disclosures have different timing requirements, and when multiple disclosures have requirements that information be presented on the first page of the statement. For example, if both mortgage loan disclosures and credit card disclosures are required to be on the first page of a statement, how would these statements be combined?"

As noted in this preamble, there are potential conflicts between regulations on combining statements. For mortgage and open-end statements, there isn't an answer on this conflict regarding first page requirements.

However, between open-end and asset account statements, the commentary to section 1026.7(b)(13) (open-end periodic statements) states:

"Some financial institutions provide information about deposit account and open-end credit account activity on one periodic statement. For purposes of providing disclosures on the front of the first page of the periodic statement pursuant to § 1026.7(b)(13), the first page of such a combined statement shall be the page on which credit transactions first appear. This guidance also applies to financial institutions that provide information about prepaid accounts and account activity in connection with covered separate credit features accessible by hybrid prepaid-credit cards as defined in § 1026.61 on one periodic statement."

As noted above, if an open-end credit account statement and an asset account statement are combined, the first page, for purposes of section 1026.7(b), is the first page upon which credit transactions appear. For residential mortgage loans, the commentary to section 1026.41(c) (mortgage loan periodic statements) states:

"Nothing in § 1026.41 prohibits a servicer from including additional information or combining disclosures required by other laws with the disclosures required by this subpart, unless such prohibition is expressly set forth in this subpart, or other applicable law."

While the above commentary does permit combined statements, unfortunately, unlike with the commentary to section 1026.7(b)(13), there is no discussion on what constitutes the first page of a combined mortgage loan statement and asset account statement. Making it likely that the mortgage statement would need to be first before any other statement.

For share accounts, NCUA's Truth in Savings Regulation, section 707.3 permits:

"Disclosures for each account offered by a credit union may be presented separately or combined with disclosures for the credit union's other accounts, as long as it is clear which disclosures are applicable to the member or potential member's account."

Likewise, Regulation E, section 1005.4(b) states:

"A financial institution may include additional information and may combine disclosures required by other laws (such as the Truth in Lending Act (15 U.S.C. 1601 et seq.) or the Truth in Savings Act (12 U.S.C. 4301 et seq.) with the disclosures required by this part."

Any credit union attempting to combine periodic statements should consult with local counsel if combining statements is a plausible way for the credit union to reduce costs or even paper usage. Failing to adhere to periodic statement timing or format requirements by combing statements inappropriately would render the credit union in violation of various regulations, in particular Regulation Z.

If you have any questions concerning this blog, please contact America's Credit Unions' Compliance Team at at compliance@americascreditunions.org.