ALEXANDRIA, Va.– The National Credit Union Administration has announced its sixth round of proposed regulatory changes associated with its Deregulation Project. The project is an ongoing review of NCUA’s regulations to ensure regulations are focused on credit unions’ safety, soundness, and resilience, the agency noted.
The latest announcement brings to 25 the number of proposals NCUA has made to date as part of the Project. Information on those earlier proposals can be found in the CU Daily here.
“With today’s announcement, NCUA is requesting comments on six proposals that would clarify agency guidance or eliminate unduly burdensome or duplicative requirements in the Code of Federal Regulations,” NCUA said.
The six proposals include:
Post-Election Training for New Board Members – 12 CFR 701.4(b)(3)
- Proposed Change: The Board proposes to remove the regulatory requirement for a credit union director to have or obtain expertise in finance and accounting within six months after appointment.
- Impact on credit unions: Removing this requirement reduces overall compliance burden on volunteer boards, NCUA said.
Loan Compensation/Commission – 12 CFR 701.21(c)(8)
- Proposed Change: The Board is proposing to add a definition of “overall financial performance” to 12 CFR 701.21(c)(8) to clarify requirements related to FICU compensation plans that include incentives or bonuses related to lending metrics as part of the FICU’s overall financial performance. The Board also proposes to add the phrase “including a senior management employee” to the exception on payments of an incentive or bonus to an employee based on overall financial performance.
- Impact on credit unions: The agency said the change would provide clarity about the meaning of the regulation in a way that makes the regulation less burdensome for credit unions. This change would help credit unions recruit and retain staff, which is an important aspect of credit union resiliency.
Eligible Obligations – 12 CFR 701.23
- Proposed Change 1: The Board proposes to revise the requirementsrelated to written purchase policies to say that the eligible obligations and notes of liquidating credit unions must comply with the purchasing FCU’s internal written policies.
- Impact on Credit Unions: This change would remove unduly burdensome, overly prescriptive requirements related to an FCU’s internal policies while still requiring the purchasing credit union to have written policies appropriate to their unique portfolio, NCUA said.
- Proposed Change 2: The Board proposes to revise the requirements related to the sale of eligible obligations in a way that provides the credit union board of directors’ the authority to establish the limitations of their written sale policies.
- Impact on Credit Unions: According to NCUA, the change would reduce administrative burden without eliminating the requirement that FCUs manage their operations responsibilities. It would also give the FCU more flexibility to tailor their process to its needs and risk profiles.
- Proposed Change 3: The Board proposes to remove 12 CFR 701.23(g), regarding payments and compensation because FCUs are already governed by broader conflict of interest provisions in their bylaws and by the fiduciary duties of their officials.
- Impact on credit unions: This change would provide federal credit union boards additional flexibility in establishing risk-based policies and compensation frameworks. The change would address a provision that is duplicative of other requirements and unduly burdensome, NCUA said.
Refund of Interest (Loans) – 12 CFR 701.24
- Proposed Change: The Board proposes to remove 12 CFR 701.24 because it is duplicative of the FCU Act.
- Impact on credit unions: According to NCUA, the change would minimize compliance burden by centralizing requirements into one place. FCUs would only need to reference the FCU Act (12 U.S.C. 1761b (9)) to confirm requirements for refunds of interest to members.
Credit Union Service Contracts – 12 CFR 701.26
- Proposed Change: The Board proposes to remove 12 CFR 701.26, which authorizes FCUs to enter into contractual agreements, but requires agreements be in writing.
- Impact on credit unions: This change would minimize compliance complexity by removing superfluous requirements, the NCUA said.
Definitions related to Statutory Lien – 12 CFR 701.39(a)(1)
- Proposed Change: The Board proposes to eliminate the definition of “except as otherwise provided by law or except as otherwise provided by federal law” from NCUA regulation 12 CFR 701.39.
- Impact on credit union: Removing unnecessary text makes the regulation easier to understand and reduces the compliance burden, according to NCUA.
How to Submit Comments
NCUA said stakeholders who want to submit comment should type or paste the docket numbers into the search on the Federal Rulemaking Portal.
Additional information on the NCUA Deregulation Project is available here.
