The first edition of the Fed’s Consumer Compliance Outlook has been released, with the main article addressing Regulation Z’s advertising requirements. The article explains the requirements that apply to all types of credit, then discusses the requirements specific to open-end and closed-end credit, and concludes with ways a credit union may manage advertising risks.
What I found most interesting about this article was the section about effective practices to manage Regulation Z advertising risks, so this blog will summarize the practices discussed in the article. However, if the credit union is looking for guidance with specific Regulation Z advertising issues, this article, along with our NAFCU Ad Guide are fantastic resources for understanding what a credit union must include when advertising credit products.
The guidance explains that like most compliance programs, the credit union’s advertising management practices should be tailored to the size and complexity of the credit union, however there are some general principles that may be helpful to all credit unions. The first practice the article discusses is effective oversight by senior management and the board of directors, which is crucial in managing advertising risk. This may include management approval of advertising methods or ensuring proper vendor management due diligence if using a third-party to create advertisements.
The second practice the article advises is implementation of strong policies and procedures to ensure compliance with the advertising requirements of Regulation Z. The article provides a helpful list of possible tools and procedures the credit union may want to utilize:
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