Letter seeks clear communications on rules for state charters

(March 12, 2021) Clear communication to federally insured state credit unions (FISCUs) of which regulations do and do not apply to them – and also providing a clear chain of regulatory citations applicable to any given issue being communicated – are among the recommendations NASCUS made this week to NCUA about its communications and transparency.

In a comment letter on the agency’s requestion for information (RFI) about its communications practices, NASCUS placed strong emphasis on how the agency communicates information about regulation and compliance relevant to the state system. NASCUS wrote that, often, the agency’s communications “fall short in clearly communicating to FISCUs what applies and how.

The association pointed to NCUA’s annual (and recent) regulatory review, which identifies provisions of agency rules under review – but without identifying to FISCUs which of those provisions apply. Another example, NASCUS stated, was a May 2020, NCUA Letter to Credit Unions (20-CU-16, “Low-Income Designations: Qualifications of Military Personnel”). NASCUS noted that the communication cites the agency’s low-income designation rule, 12 C.F.R 701.34, but fails to provide FISCUs the corresponding citation applying that provision to state credit unions (12 C.F.R 741.204).

There is simply no reasonable justification for preserving an organizational framework for compliance guidance that requires FISCUs to spend time searching through the regulations to determine if the information being evaluated applies to them and how it applies to them,” NASCUS wrote.

In order to clearly communicate compliance obligations, the association urged NCUA to reorganize its regulations to consolidate all rules applicable to FISCUs, a long-standing goal of the state system. NASCUS stated that doing so would “much more clearly communicate compliance obligations and reduce the regulatory burden of FISCUs constantly having to search through dozens of NCUA rules to identify references to rules that apply to them.”

NASCUS also recommended that all NCUA communications applicable to FISCUs should contain all relevant regulatory and statutory citations, including the reference to Part 741 of NCUA’s rules that applies the subject matter of NCUA communications to FISCUs. “Going forward there should never be an NCUA compliance communication applicable to FISCUs that does not contain a reference to Part 741,” NASCUS wrote.

In other comments, NASCUS recommended:

  • The agency maintain a list of interagency statements and guidance on the NCUA.gov website where other regulatory and supervisory guidance is presented, rather than only as a press release or a “letter to credit unions.”
  • On credit union mergers and conversions, that the agency provide both an individual transaction data set as well as systemic data (as was done prior to 2018). “The aggregate systemic data is valuable to stakeholders thinking strategically about the effect and implications of trends in consolidation and charter conversion on the system as a whole,” NASCUS wrote.
  • Creation of a dedicated page on the agency website to provide information for de novo state credit unions seeking to apply for federal share insurance (and referred the agency to the FDIC website (FDIC.gov) for an example of a deposit/share insurance application page). Additionally, NASCUS recommended, the agency should provide a link to NASCUS for parties seeking information on conversion to a credit union charter. “NASCUS can provide additional information and contacts for state regulators were NCUA to provide a link to NASCUS,” the association wrote. “Providing a link to NASCUS for additional information would be similar to NCUA’s webpage dedicated to Financial Literacy and Education which provides helpful links to various non-profits dedicated to financial literacy.”
  • Clarification by the agency of what publications and guidance can be expected to be communicated by way of the “NCUA Express,” an e-mail information delivery service of the agency. “NASCUS has experienced an intermittent inconsistency in receipt of email communications from that otherwise excellent service resulting in our resubmitting credentials from time to time,” NASCUS stated. “In addition to the interruption in receipt of notices, NCUA Express does not always appear consistent in communicating all guidance documents issued and published on NCUA.gov. For example, NCUA Legal Opinions are not communicated by way of this platform.”
  • More clear delineation between data for FISCUs and FCUs.

NASCUS comment letter: NCUA RFI on communications and transparency