ALEXANDRIA, Va.—With NCUA’s new associational common bond rule taking effect Monday, the agency has issued guidance to FCUs on the new regulation.
NCUA has sent a Letter to Credit Unions (15-FCU-03) that includes details on the rule’s implementation policy, as well as a supervisory letter to field staff on associational common bond requirements.
Under the new reg, the agency now provides automatic approval of 12 categories of associations, which are outlined in the letter. They are:
- Alumni associations
- Religious organizations, including churches or groups of related churches
- Electric cooperatives
- Homeowner associations
- Labor unions
- Scouting groups
- Parent-teacher associations organized at the local level to serve a single school district
- Chamber of Commerce groups (members only, not employees of members)
- Athletic booster clubs whose members have voting rights
- Fraternal organizations or civic groups with a mission of community service whose members have voting rights
- Organizations with a mission based on preserving or furthering the culture of a particular national or ethnic origin
- Organizations promoting social interaction or educational initiatives among persons sharing a common occupational profession.
NAFCU pointed out that the Supervisory Letter (SL No. 15-02) includes the red flags field staff should look for that “may indicate weak controls over an FCU’s FOM”:
- Advertising in local media or on the Internet that “anyone can join”
- Unusual patterns regarding how borrowers became members
- Establishing a new organization for the primary purpose of attracting new members;
- Reliance on fee income from a new program where the majority of new members have joined; and
- Compelling allegations that the credit union is engaged in questionable membership and advertising practices.