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The NCUA Board on Thursday issued a final rule amending the procedures for adding associational groups to federal credit unions' fields of membership by a 2-1 vote, with Board Member J. Mark McWatters voting no due to his concern that this rule will increase the regulatory burden for a majority of credit unions.

The final rule creates a method by which 12 common types of associations will automatically qualify for inclusion in a federal credit union's field of membership (FOM). The rules takes effect 60 days after publication in the Federal Register.

NAFCU supports the rule's effort to streamline parts of the FOM application process but has concerns about the rule's threshold-determination requirement. The threshold-determination requirement serves as a preliminary test to determine if an association only was created primarily for the purpose of expanding a credit union's membership.

NAFCU Director of Regulatory Affairs Alicia Nealon reiterated NAFCU's "serious concerns" about the requirement in a statement after the meeting. NAFCU staff are reviewing the final rule and will discuss its impact on credit unions in a Final Regulation soon.

In a statement, McWatters said the threshold-determination requirement is "subjective and duplicative of the more objective and transparent elements of the Totality of the Circumstances Test," a multi-factor analysis required by existing NCUA regulation. He also criticized the addition of "corporate separateness" as a factor to be considered when proposed associational group additions are reviewed based on the totality of circumstances.

He said that except for the preapproval of more groups, the final rule increases rather than reduces regulatory burden.

NCUA Chairman Debbie Matz said 99 percent of associational applicants from the past three years would have met the new threshold requirement. Board Vice Chairman Metsger said by adding the 12 preapproved groups, the final rule streamlines 87 percent of associational group applications the agency receives.

Matz said Thursday's final rule was the first of many changes to come for the FOM rules, and she noted the ongoing work of the FOM working group created to gather stakeholder input on the issue. Matz encouraged credit unions to submit their input by participating in working group teleconferences, calling working group chair Matt Biliouris (of the agency's Office of Consumer Protection), or by email to FOMsuggestions@ncua.gov.