ALEXANDRIA, Va.–If there is one thing that’s clear from post-exam surveys of credit unions, it’s that NCUA could use to “Netflix” many of its processes, according to its chairman.
Staff who addressed the board during its meeting on Thursday, said it is working to do just that in many ways, especially when it comes to duplicative requests for information during exams.
During the board meeting, which had all three NCUA board members participating following a court ruling earlier in the week that reinstated board members Todd Harper and Tanya Otsuka, who were fired by President Trump in April, the agency’s acting Ombudsman reviewed its 2024 report, but spent most of its comments disusing exam-related issues.
The role of the Office of the Ombudsman, which was created as part of the Riegle Community Development Act in 1994, officially is to act as a liaison between the agency and any affected person with respect to any problem such party may have in dealing with the agency resulting from the regulatory activities of the agency.
It said it also works to encourage complainants to come forward and preserve confidentiality.
Nearly 600 Inquiries
As the CU Daily reported earlier, the Office of the Ombudsman in 2024 received 598 inquiries from external stakeholders, processed 44 inquiries and complaints related to data breaches and cyber threats at federally insured credit unions, and made one recommendation to the NCUA Board about the agency’s consumer complaint process. It also conducted 10 independent reviews.
The discussion during the board meeting focused primarily on the survey of credit unions it conducts—it is overseen by an external vendor—that is aimed at improving processes. It also survey a NCUA staff.
In comments to the board, Shameka Sutton, acting ombudsman, office of the Ombudsman, and Amanda Parkhill, acting director of the Office of Examination and Insurance, focused primarily on the feedback from credit unions related to the exam process and procedures.
The Biggest Complaint
The biggest complaint: too many duplicative requests by NCUA for records.
Sutton, who said participation in the post-exam survey has been trending downward, but there are common themes (see charts).
“The most common feedback was the distribution of on-site and remote exam work,” Sutton said. “Overall, examiner responses indicated many benefits to completing most of the exams on-site at the credit unions.”
She said the survey found additional on-site work would be beneficial for training new employees and improving communications with management.
In addition, in the hybrid exam structure, communication challenges were frequently cited as slowing down the process. Among the other learnings, Sutton said, is that credit unions of less than $100 million in assets should be made aware of additional assistance from NCUA, and should be given more guidance covering overdraft and NSF fees.
The Big Issue The Big Issue
But the big issue, Sutton, said was complaints related to duplicate requests for data and information, including a request the agency reduce duplicative request items that are part of its secure exam portal.
Amanda Parkhill, acting director of the Office of Examination and Insurance, explained that while there are polices in place requiring examiners to coordinate on items requested, and that other steps have also been taken to reduce duplicative requests, “based on the survey responses we have some more work to do>
To that end, she explained why examiners often request information more than once, which can be for reasons that include not having access to certain documents, files being given different names, and confusion by both the credit union and the examiner over what’s being requested or provided.
Parkhill said the agency is open to other ideas or suggestions for streamlining the exam process, as well.
Long-Time Issue
In his comments following the presentation, NCUA Chairman Kyle Hauptman acknowledged complaints related to duplicative requests has been an ongoing issue for the agency, and that many CUs believe NCUA too often requests “low-value” documents.
He said tackling the issue and becoming more efficient has become even more critical now that NCUA has lost 20% of its staff following the White House-ordered downsizing.
Hauptman shared how he sat down with an examiner and had that person walk him through the process and the exercise revealed numerous procedural and access issues between the examiner and their supervisor, among other challenges.
“We need to Netflix this,” Hauptman said. “We’ve got to find a new way to do it so it’s easier.”
Harper: Questions on Independence, New Offering
NCUA Board Member Todd Harper, participating virtually following a court order that reinstated him and fellow Board Member Tanya Otsuka, said there had been a board recommendation made earlier that the Office of the Ombudsman be made truly independent. That recommendation as made in 2012, and Sutton indicated that with the hiring freeze currently in place at the agency, it’s unlikely to be a recommendation that is acting upon in the short term.
Harper, who observed that members of the NCUA board also act as ombudsman, said he has consistently heard from credit unions over whether it would be possible for the agency to set up a web page that listed for credit unions as CUs hit certain asset thresholds, they would know the materials they need to have in place for examinations.
Sutton said NCUA would look to create such a checklist for credit unions.
Otsuka: A Number that ‘Jumped Out’
Otsuka said she recently reviewed the Office of the Ombudsman’s 2024 report, and that “jumped out” at her were the inquiries and complaints related to cyber threats and data breaches, especially from credit union members concerned about the privacy of their data and applicable coverage of share insurance if their credit unions were to fail.
“Clearly, this is something that people care about, because they want to know that their money is safe and they want to know that their personal information is safe,” Otsuka said. “It’s the NCUA’s job to make sure that credit unions are protecting their members and that people trust their institutions. Addressing these issues should also be a key focus for us. This somewhat dovetails with the things that we should be thinking about in the context of AI.”
