Legislative & Regulatory Update

​NCUA review to ease credit union burden; ANPR for records preservation & guidelines; and look to ViClarity for your dues-supported compliance support. 

by John Alexander, Director of Legislative & Regulatory Affairs
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NCUA launches voluntary regulatory review to ease credit union burden.
The National Credit Union Administration (NCUA) Board is undertaking a significant review of its regulations, aiming to identify and eliminate outdated, unnecessary, or unduly burdensome rules. This proactive move, inspired by the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA), marks a voluntary effort by the NCUA to streamline and modernize regulatory requirements for federally insured credit unions.
Here’s what you need to know:

The NCUA Board has initiated a voluntary review of its regulations, inviting public comments to identify rules that may no longer be necessary or that pose excessive burdens. This process is set to unfold over the next two years, with the Board publishing four Federal Register documents, each addressing different regulatory categories.
In keeping with the spirit of the EGRPRA, the NCUA is embarking on a decennial review of its regulations, divided into ten distinct categories. This first document seeks comments on the regulations concerning “Applications and Reporting” and “Powers and Activities.” The goal is to gather feedback on how these regulations impact credit unions and explore potential modifications to improve efficiency and reduce regulatory burdens.

Key points of interest.
EGRPRA aims to reduce the regulatory burden on insured depository institutions while maintaining safety, soundness, and consumer protection. Although not required by statute, the NCUA has chosen to participate in this review to ensure its regulations remain relevant and efficient for credit unions.
The review will take place over two years, with each phase focusing on specific regulatory categories. This staggered approach allows stakeholders ample time to provide detailed comments on discrete regulatory areas, facilitating a thorough and effective review process.

Categories under review.
Applications and Reporting: Includes regulations on federal credit union chartering, mergers, conversions, reporting requirements, and more.
Powers and Activities: Encompasses lending, leasing, borrowing, investments, and other operational activities of credit unions.

The NCUA seeks to:

• Identify Outdated Regulations; Regulations that no longer reflect current industry practices or technological advancements.
• Eliminate Unnecessary Burdens; Rules that impose excessive costs or administrative challenges without corresponding benefits.
• Enhance Regulatory Clarity; Simplify complex regulations to improve understanding and compliance.

Records preservation program, appendices, and guidelines.
An advance notice of proposed rulemaking (ANPR) aimed at revolutionizing the records preservation program for credit unions has been issued. This initiative seeks to update a regulation that hasn't seen a refresh in 15 years, inviting stakeholders to weigh in on improvements and modernizations needed to keep up with today's best practices.

Here's what you need to know:

The NCUA Board is taking proactive steps to solicit feedback on updating the current records preservation program regulation and guidelines. They aim to clarify and modernize these regulations to better serve credit unions and their members.

The ANPR aims to gather input on the existing regulation's content, which may be outdated or inconsistent with current best practices. The Board is particularly interested in addressing the structure of the regulation, which currently mixes mandatory requirements with guidance, potentially causing confusion.

Feedback from 2023 highlighted that part 749 and its appendices are perceived as burdensome and unclear. This review aims to assess and potentially revise these regulations to ensure they meet current needs and best practices for record preservation.

Part 749 mandates that all federally insured credit unions maintain a comprehensive records preservation program to safeguard vital records. This includes maintaining duplicate records offsite and ensuring records can easily be reconstructed.
 
The Board seeks input on:

• Definitions of Vital Records; Are the current definitions comprehensive and relevant?
• Retention Practices; How are credit unions currently storing and preserving vital records? What challenges do they face?
• Modernization Needs; What updates and improvements can be made to align with today's best practices?
• Clarity and Structure; How can the regulations be restructured to eliminate confusion between regulatory requirements and guidance?

The ANPR addresses the need for clarity and modernization in records preservation. The NCUA's regulations have not been updated in over a decade, leading to potential confusion and inefficiencies for credit unions. The Board is keen on receiving feedback to ensure these regulations are practical, clear, and aligned with contemporary standards.

Are you taking full advantage of ViClarity?
The Dakota Credit Union Association’s dues-supported compliance solution, ViClarity, is available to all DakCU members. Access is password protected, so you do need to log in with user name and password; if you have questions about establishing your members-only account with ViClarity, click here for detailed instructions or contact me for assistance.  

Providing compliance support at no additional cost to our members in the Dakotas, ViClarity aims to make regulatory compliance easier through their superior consulting services and technology solutions. I encourage you to take full advantage of this benefit of membership!