FOM Case Will Proceed to Additional Hearings Following SCC Ruling
After the credit union had appeared to gain the upper hand in the case late last year, a recent ruling from State Corporation Commission of Virginia (SCC) examiner A. Ann Berkebile means further hearings will be necessary to decide the matter. Both sides met in January to present evidence to the examiner, who ultimately decided the banks were within reason to request a subsequent hearing.
The case has been ongoing since 2018 and centers on VACU's application to expand its field of membership (FOM) to include the Medical Society of Virginia (MSV) and its close to 10,000 members. Eager not to lose out on what is considered a coveted consumer segment, the VBA and banks are challenging the move, claiming the CU is going too far in attempting to add so many potential new members when the legal limit for a single expansion currently sits at 3,000. Such a step, they maintain, should not be possible without greater taxation and regulation, the likes of which traditional banks are faced with.
This past summer, the SCC’s Bureau of Financial Institutions (BFI) approved the initial application for expansion, however the issue was quickly put on hold following a VBA petition, which gave the association time to mount its counter response.
While both sides sought to project confidence as they look ahead to the next round of hearings, which will likely take place in May or June of this year, clearly the banks were the happier of the two parties following this latest turn of events.
"We are pleased that the recent ruling offers us the opportunity to continue our efforts to stop a field of membership expansion that we believe should not have been approved in the first place,” said Bruce Whitehurst, CEO of the VBA.
This case has been followed particularly closely by the financial industry as it may end up before the state Supreme Court with the potential to be a landmark ruling for credit unions. In many ways, the saga represents a classic battle that has been raging for years ever since CUs were granted greater freedom to expand their services and fields of membership in the late 1990's.
Banks weren't too pleased then; they still aren't today.