Credit unions are financial cooperatives. While not all credit unions have normally adopted the Seven Cooperative Principles as part of their mission statement, many do use these principles to express the fundamental difference between credit unions and banks. The fifth cooperative principle is to provide education, training and information for members — something that many credit unions are quite good at.
In 2001, the National Credit Union Administration (NCUA) stated that federal credit unions have not only the power, but also “the responsibility of promoting provident planning through consumer education and responsible investment.” (66 Federal Register 40852) In that final rule, NCUA established that all federal credit unions have the incidental power and authority to offer advice, guidance or services to their members to promote thrift or otherwise assist members on financial matters. (See 12 CFR § 7.213(f))
While federal credit unions cannot engage in activities that require U.S. Securities and Exchange Commission (SEC) registration as a broker, dealer or investment adviser, this authority still allows for a broad scope of activities. NCUA has indicated that authority can include providing counsel about setting budgets, establishing financial goals, managing tax liabilities, money management, paying down debt, saving for the future, types of investments and diversification principles.
Moreover, NCUA has indicated that federal credit unions may also be able to provide these financial counseling services to nonmembers. In Legal Opinion Letter 2006-1135, NCUA found that federal credit unions have the power to provide these services to nonmembers as part of a federal credit union’s community outreach efforts, provided that nonmembers are not charged a fee in excess of any cost assessed to the federal credit union by a third party.
From the March-April 2019 edition of The NAFCU Journal magazine.