Sixteen House Republican representatives said federally insured depository institutions should be allowed to continue providing estimated third-party fees in remittance transfers instead of exact figures.
The Consumer Financial Protection Bureau previously issued a rule requiring remittance transfer providers to disclose certain third-party fees and exchange rates that will apply to the transfer. The Dodd-Frank Act allows depository institutions to give estimates instead of the exact figures. The CFPB in April 2014 extended the temporary exception for depository institutions to July 21, 2020, from July 2015.
In a letter to CFPB Director Kathy Kraninger, the representatives wrote the exception should be extended once again. They noted depository institutions often use open network payment systems to do remittance transfers, in which case no single institution has end-to-end control over the transaction.
"This also means that when depository institutions serve as remittance transfer providers, they often have no way to determine with any precision some of the fees that may be assessed while the funds are in transit," the Republican representatives wrote.
The representatives argued that not all depository institutions can readily convert all foreign currencies at the time the transfer is conducted. They also said if the currency exchange takes place after the transfer is initiated, financial institutions can only estimate the applicable exchange rate.
They also wrote that if the temporary exception expires, many banks will stop providing remittance services to customers as they will not be able to comply with the complexities of the rule.
"Not only would this make the marketplace less competitive, it would be a significant loss of choice for consumers," the representatives wrote. "While banks and credit unions make up a relatively small share of overall remittance transfer volume, they are often the only option for consumers seeking to conduct higher value transactions, and depository institutions are responsible for nearly half of the overall value of funds sent using international transfers."
