ARLINGTON, Va.—How could credit unions be affected by some of the changes to the federal credit union bylaws – finalized by the NCUA board last week, as CUToday.info reported here – especially when it comes to member expulsion, limitation of services, and unlawful purposes?
Not so much.
"While these changes are helpful in that they codify existing guidance in a single place, it does not actually represent any significant change for FCUs in terms of their ability to cope with abusive members or members who use their accounts for unlawful activities," explained NAFCU Senior Regulatory Compliance Counsel Elizabeth LaBerge. "It appears that for a substantive change on these issues, action by Congress would be necessary."
As a result of the limitations NCUA faces due to language in the Federal Credit Union Act, LaBerge said the article of the bylaws that specifies expulsion procedures (Article XIV) "was rewritten, but not changed substantively."
In addition, new commentary to (Article XIV) references another article related to the limitation of services (Article II), which also saw some changes. The primary changes were to incorporate prior legal opinions on credit unions' ability to limit services and access to facilities to members who are abusive and disruptive. LaBerge further details a new section to Article II that defines a member in good standing and when core rights of membership are still retained.
‘Ample Support’
The bylaw changes also attempted to address credit union concerns related to "members who use accounts for the purpose of conducting fraudulent or criminal transactions" by adding another comment to Article XVI.
"In it, NCUA states that an FCU need not adopt a specific policy or requirement that accounts be used in conformity with the law and that the section is 'ample support' for an FCU to justify limiting services for any member who is found to be using an account in furtherance of an unlawful purpose," LaBerge explained.