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NAFCU to NCUA: Succession planning proposed rule is ‘burdensome’ and ‘unnecessary’ for CUs
NAFCU’s Regulatory Affairs Counsel Aminah Moore wrote a letter to the NCUA Friday pushing back on the potential advancement of its proposed rule requiring federal credit unions’ (FCU) boards of directors to establish a process for succession planning. Under the proposed rule, the FCU must establish a plan for positions such as officers of the board, management officials, executive committee members, supervisory committee members, and (where provided for in the bylaws) credit committee members.
“NAFCU does not support this proposed rule, as it is burdensome and unnecessary to ensure the safety and soundness of the credit union system,” wrote Moore.
Moore expressed concern that the rule may create negative impacts for smaller credit unions as they will be faced with additional regulatory burden. In addition, Moore highlighted that the rule lacks clarity regarding the “key positions” required in a credit union’s succession plan, the requirement that credit unions’ boards of directors have a “working familiarity” with its succession plan, and the steps a credit union should take if it cannot adhere to its succession plan.
Instead of the proposed rulemaking, Moore offered multiple recommendations in the letter, including:
- mirroring banks’ succession planning requirements and issue guidance;
- conducting new market analysis on the correlation between poor management succession planning and consolidation;
- adding more resources that will assist credit unions in succession planning; and
- incorporating succession planning into the agency’s Call Report.
In addition, Moore recommended that the NCUA focus on promoting the strength of the National Credit Union Share Insurance Fund “which will lead to a stronger credit union industry that is able to focus on the needs of their communities.”
Read the full letter. Moore discussed the proposed rule in a recent American Banker article; and NAFCU previously sent members a Regulatory Alert regarding the NCUA’s proposed rule on this topic.