May 22, 2018

NAFCU offers ways to modernize FCU bylaws

NAFCU, based on feedback from member credit unions, offered ways to modernize the Federal Credit Union (FCU) Bylaws in a letter to the NCUA Monday. NAFCU has previously offered suggestions to improve the bylaws, and thanked the NCUA in the letter "for its commitment to modernizing the bylaws with the express intent of reducing regulatory compliance burdens and providing increased operational flexibility to credit unions."

NAFCU Regulatory Affairs Counsel Ann Kossachev sent the letter in response to the NCUA's advance notice of proposed rulemaking (ANPR) issued during its March board meeting. NAFCU's new Economic & CU Monitor revealed that 92 percent of credit unions support improvements to the FCU bylaws, and many survey respondents would like the bylaws modernized to reflect current technology.

The ANPR included five questions related to specific bylaw concerns; NAFCU's recommendations for each include:

1. Amendment Process

  • Updating the bylaws to reflect the current procedure for submitting amendments to the Office of Credit Union Resources and Expansion (CURE), rather than regional directors.
  • Adopting a set timeline for responding to novel proposed bylaws amendments to provide credit unions with an appropriate and predictable turnaround.

2. Limitation of Service and Expulsion

  • Preserving the limitations of services provision in its current form to afford credit unions with the flexibility to craft a policy that best suits their needs.
  • Expanding the definition of "nonparticipation," in regard to member expulsion based on nonparticipation, to include those individuals who use credit union services in furtherance of illegal purposes.

3. Recruitment and Development of Directors

  • Affording greater flexibility to nominating committees in the election of directors.
  • Considering conducting NCUA-sponsored, voluntary educational sessions to facilitate the development of current and potential directors.

4. Member Attendance at Meetings

  • Permitting the use of technological resources to increase member attendance at annual and special meetings.

5. Removing Overlaps with Regulations

  • Removing portions of the bylaws that overlap with existing NCUA regulations, such as Article 11, which addresses loans and lines of credit to members.

Kossachev also recommended that the NCUA revisit the bylaws more frequently and restructure the bylaws' hierarchy to improve the ease of use.

Kossachev's full letter is available here; the Monitor report is available here.