Credit unions should be aware of recent compliance changes involving several finalized rules by the NCUA Board. These include the PAL II, Federal credit union bylaws and Supervisory Committee rules.
Payday Alternative Loans II
The Board has created the PAL II to complement the PAL product by allowing a member to borrow up to $2,000 and with a term from between one month to 12 months. The PAL II can be processed as soon as a person becomes a member rather that requiring a waiting period after becoming a member. In addition, credit unions are prohibited from charging an overdraft fee. Otherwise, most of the PAL’s provisions apply to the PAL II. The final PAL II rule in the Federal Register is available here.
Federal credit union bylaws
The significant changes introduced by NCUA were primarily to end confusion created by the bylaws, so many of the changes involve clarification, reorganization and additional commentary. One key change was a reference to the CURE (Credit Union Resources and Expansion) Office that is responsible for approving Federal credit union bylaw amendments. Relating to CURE, the board changed the time frame for approval/denial of bylaw amendments to 60 days, during which requests will be deemed denied if they aren’t approved in that 60-day window. If denied by NCUA, the FCU may then appeal pursuant to the appeals procedures set out in NCUA’s regulations.
Some other specific changes in the Federal credit union bylaws include:
- Clarifying the definition of “member in good standing” and how a credit union responds to disruptive members. Staff commentary and legal opinions are referenced in these sections to describe appropriate remedies in dealing with such members.
- The Board encourages allowing virtual participation (online video presentation) with in-person member meetings to increase member engagement.
- Allowing members to vote for board members in a variety of ways other than paper ballot including via phone or internet, but still requiring credit unions to offer members the opportunity to use a physical ballot to vote.
- A variety of options will be available regarding boards of directors. There is clarification regarding number, attendance, and composition of the board. One interesting feature will allow credit union boards to establish two additional types of non-voting directors to the board. Associate directors, who can gain insight and experience for a potential regular seat on the board, and directors emeritus, for directors that have served on the board in the past and can still provide wisdom while being honored for previous service to the credit union. These positions will not have voting rights but can participate in the deliberations.
The totality of changes can be reviewed in the Federal Register here.
Supervisory Committee Audits and Verifications
The last recently finalized rule is the Supervisory Committee Audits and Verifications rule. The Board has eliminated the Report on Examination of Internal Controls Over Call Reporting. It also removed the Supervisory Committee Guide and replaced it with an easier to follow appendix. The new rule no longer allows the Balance Sheet Audit option and also removed the 120-day delivery deadline. These changes to the rule should make the supervisory committee audit a less burdensome process.
This rule can be viewed here.
If you have any questions about these new rules or how they may impact your credit union, contact Director of Regulatory Advocacy Mike Lee.