Financial Services & Products Advisory: NCUA Proposes Comprehensive Revisions to Field of Membership Rules

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On November 19, 2015, the National Credit Union Administration (NCUA) board unanimously approved a proposed rule that would revise the federal credit union (FCU) field-of-membership (FOM) rules. The proposed updates to the FOM rules follows updates to the associational common bond rules finalized by the NCUA earlier this year. The NCUA board chairman has stated that the proposed revisions are expected to “expand consumer choice, increase access to affordable financial services and provide regulatory relief to a wide range of federal credit unions” while keeping the “federal charter competitive with state charters that allow more permissive field-of-membership rules.” Comments on the proposed rule must be received within 60 days after publication in the Federal Register, which as of December 2 has not yet occurred.

The proposal is part of an overall effort by the NCUA to update its rules, both to strengthen federal credit unions and as a result of a voluntary review of NCUA regulations in line with the decennial review by the banking agencies under the Economic Growth and Regulatory Paperwork Reduction Act of 1996. The NCUA dubbed 2015 the “Year of Regulatory Relief” and, as noted in July 2015 testimony before the House Financial Services Committee, has been working to ease burdens and expand powers in at least six areas this year, including expanding regulatory relief consideration to even more small credit unions, facilitating access to supplemental capital for risk-based capital purposes, streamlining field of membership requirements, eliminating unnecessary fixed-assets limits, allowing qualified credit unions to securitize assets and removing prescriptive provisions on member business lending.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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