ALEXANDRIA, Va.–The first of a number of approaching deadlines to comment on NCUA proposals that are part of its Deregulation Project is Monday, with comment deadlines for other proposals also approaching.
Here’s a look at what’s been proposed and when comments are due:
May 11
Records Preservation Program and Appendices: Record Retention Guidelines; Catastrophic Act Preparedness Guidelines
NPRM Summary: On April 24, 2024, the NCUA Board published an advance notice of proposed rulemaking (ANPR) to solicit comments on ways the agency can improve and update its vital records preservation program regulation and accompanying guidelines, the agency stated. It added that based on public comments received in response to the ANPR and upon further consideration of the issues involved, the board is publishing this proposed rule to simplify and streamline part 749. The board is proposing to update part 749 by clarifying the purpose of the regulation, updating the definitions, and removing the appendices.
Simplified Summary: “The purpose of the proposed rule is to reduce the regulatory burden of vital records preservation. The proposed changes would ensure that only essential records are kept, and only for as long as they are necessary to restore important member services,” NCUA said. “The Board is proposing to update 12 CFR 749 by clarifying the purpose of the regulation, updating the definitions, and removing unnecessary references to recommendations and guidance.”
For the full proposal, go here.
May 26
Third Party Servicing of Indirect Vehicle Loans
NPRM Summary: The NCUA Board is seeking comment on a proposed rule that would remove the NCUA’s unnecessarily prescriptive regulation regarding third-party servicing of indirect vehicle loans. This action would reduce regulatory burden and provide credit unions with greater operational flexibility, consistent with a principles-based supervisory approach. The intent is to reduce administrative costs and compliance complexity, enabling credit unions to serve their members more efficiently, according to the agency.
Simplified Summary: “Third-party servicing of indirect vehicle loans, limits a federally insured credit union’s ability to purchase indirect auto loans serviced by a third party,” NCUA said. “Today, a credit union can only invest up to 50% of its net worth in indirect auto loans serviced by a third party. After 30 months of experience with a particular servicer, a credit union can invest up to 100% of its net worth in indirect auto loans serviced by that third party. The proposed rule would remove these overly prescriptive limitations.”
For the full proposal, go here.
June 6
Chartering and Field of Membership
NPRM Summary: The NCUA Board proposes to amend the associational common bond provisions of its chartering and field of membership (FOM) rules. The proposed FOM amendment would clarify that requiring the purchase of a product or service as a condition of membership no longer automatically bars eligibility as a recognized association. The board does not believe such an automatic bar is required under the Federal Credit Union (FCU) Act, and a client-customer relationship as a condition of membership may still be incidental in a manner that permits an evaluation of the group’s activities and overall circumstances.
Simplified Summary: “NCUA’s Chartering and Field of Membership Manual outlines the requirements for forming and expanding a federal credit union (FCU). Under current rules, the Chartering Manual establishes eligibility requirements for an associational common bond and identifies certain groups that are not eligible,” NCUA said. “Specifically, the current rule states that associations primarily based on a client-customer relationship do not qualify for associational common bond status. In such a case, if membership in an association requires purchasing a product or service (such as insurance), the group is interpreted as falling under this automatic bar to eligibility, regardless of other factors.
“The proposed rule would enhance consumer access to financial services by eliminating language in the Chartering Manual that automatically disqualifies one type of associational group and instead permits further evaluation of circumstances as whole,” NCUA added.
For the full proposal, go here.
