News

NCUA Makes Siginificant Changes to Field of Membership Rule — 10/27/16

The two-person National Credit Union Administration Board held its October 27th meeting and passed a much anticipated rule governing the way credit unions define their fields of membership.

“More Americans will become eligible for credit union products and services under a final rule (Part 701) approved by the Board to modernize NCUA’s field-of-membership regulations,” the agency said in a news release following the board meeting.

“This comprehensive rule expands consumer access to credit and provides them a safe place to invest their life savings,” NCUA Board Chairman Rick Metsger said. “Congress passed the Federal Credit Union Act and the Credit Union Membership Access Act to improve access for consumers to a national system of not-for-profit cooperative credit. But, the world has changed since we last put in place rules to implement these laws. We cannot anchor our regulations to the past; we have to keep pace with how consumers access financial services today.”

“Our field-of-membership final rule is consistent with both the letter and spirit of the law,” Board member Mark McWatters said. “During our deliberations, I carefully examined the Federal Credit Union Act and the requirements of the Administrative Procedure Act. Based on more than 30 years of legal experience working with issues of complex statutory interpretation, I am confident that the final rule we’ve approved today follows the law. More importantly, these changes will expand access to affordable financial services for consumers, including those in underserved communities.”

Consistent with the limitations of the Federal Credit Union Act, the final rule updates key definitions and makes more than a dozen changes to NCUA’s chartering and field-of-membership rule for federal credit unions by:

  • -Allowing greater flexibility to community charter credit unions in how they define the local communities they serve;
  • -Providing credit unions with better opportunities to serve underserved areas by updating the process for defining those areas;
  • -Enhancing access to credit union services for residents of rural areas by allowing rural district credit unions to serve up to 1 million people;
  • -Streamlining paperwork for multiple common-bond credit unions that seek to serve additional groups, such as including independent contractors with a strong dependency relationship with an employee group; and
  • -Expanding credit union access for honorably discharged members of the armed services by allowing them to join credit unions serving their active-duty counterparts.

The final rule also modifies the type and extent of information that a federal credit union must submit to support an application to expand its field of membership.

The final rule, available online here, will become effective 60 days after publication in the Federal Register. A comparison chart, available online here, summarizes changes made to the previous rule.

# # #