WASHINGTON BUREAU – Scott Cipinko, executive vice president of the Consumer Credit Industry Association (CCIA), says the consumer credit insurance industry would be happy to help the Federal Reserve Board rewrite proposed Truth in Lending Act credit insurance disclosure notice requirements.
The CCIA, Atlanta, is one of the organizations that has written in opposition to the Fed's proposed expanded TILA Regulation Z disclosure requirements.
The Fed says it wants lenders to include notices warning consumers that credit insurance products are often more expensive than other types of insurance products, and that consumers who have enough savings or traditional insurance might not need the products.
The CCIA supports effective disclosures for credit insurance products, but "many of the proposed requirements "are not improvements and are misleading," the CCIA says in a letter developed by the CCIA staff and signed by Cipinko.
The CCIA is especially concerned about provision that would require presenting the credit insurance premium, or debt suspension or debt cancellation fee, as a finance charge when
calculating the annual percentage rate of a loan.
The proposed regulation also would require credit insurance sellers to refer consumers to a federal website that has not yet been created, the CCIA says.
"The industry would be happy to assist the Board in creating objective, factual and educational materials, describing the products in objective terms to assist consumers' educated choices," the CCIA says.
The consumer groups supporting the Fed proposal "rely on generalities and rhetoric to criticize consumer protection products and totally ignore the facts," the CCIA says. "A major concern of CCIA is that this bias and rhetoric may be built into such a website if the person or persons who developed the onerous disclosures in the proposed regulation are involved in the development of such a website."
The Fed could improve the website provision by requiring the Fed to list industry websites, such as the CCIA site, as additional sources of helpful information.
"The government does not have all of the answers," the CCIA says.
The CCIA rejects allegations that credit insurance products are unfair to consumers.
"Credit insurance and debt protection programs are designed to provide a 'bridge over troubled water' for borrowers should the unexpected occur – loss of life, sickness or injury, involuntary unemployment, or other unforeseen events," the CCIA says.
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