NCUA's Proposal On Credit Union Member Expulsion for Dangerous or Abusive Behavior

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NCUA proposed a rule which revises how federal credit unions can expel members.

The NCUA Board unanimously approved a proposed rule that would amend the standard federal credit union (FCU) bylaws to adopt a policy by which a FCU member may be expelled for cause by a two-thirds vote of a quorum of the FCU’s board of directors. Currently, a credit union could expel a credit union member in two ways: by a two-thirds vote of the membership present at a special meeting called for that purpose, and for non-participation in the affairs of the credit union as specified in a policy adopted and enforced by the board.

NCUA Chairman Todd M. Harper said, “While there are admittedly times in which the expulsion of a member is necessary to protect credit union members and staff, this is a power that credit unions should rarely use. That’s because the Federal Credit Union Act exists so that people, particularly those of modest means, can access safe, fair, and affordable financial services. That is the statutory mission of credit unions. So, in acting today, we want to preserve this guiding principle.”

Under the Credit Union Governance Modernization Act of 2022, enacted by Congress on March 15, 2022, the NCUA has until September 15, 2023, to develop a final rule that FCUs may adopt to expel a member for cause.