Industry trade groups raised concerns about the NCUA’s succession plan rule proposed in January, and in particular its impact on smaller credit unions.
The National Credit Union Administration (NCUA) should not micromanage federal credit unions by issuing a proscriptive rule requiring them to have succession plans, credit union trade groups told the agency in comments on a proposed rule issued by the NCUA.
Among the most prominent voices making themselves heard were members of both the Credit Union National Association (CUNA) and the National Association of Federally-Insured Credit Unions (NAFCU).
“We support the component parts of the proposed rule, as we believe they would result in a comprehensive succession plan,” Luke Martone, senior director of advocacy and counsel at CUNA, told the agency. “However, we believe the language included in the proposal would be more appropriate as guidance than regulation.”
NAFCU agreed. “While NAFCU does not doubt that succession planning is helpful for credit unions, a rulemaking is not,” Aminah Moore, the association’s regulatory affairs counsel, wrote in her comments. “Instead, NAFCU suggests that the NCUA add resources that will assist smaller credit unions in developing succession planning.”
What is the Proposed Rule and Why the Pushback?
In January, the agency’s board approved a proposed rule that would require all federal credit unions to have a formal succession plan. This was followed by a comment period, which came to a close on April 4.
At the time, NCUA officials said the proposal would give institutions wide discretion in developing plans. They also said the proposal would help small credit unions plan for succession when officers step down.
Credit union trade groups disagreed.
Martone wrote that while the proposal is intended to benefit small credit unions that may find succession planning a challenge, those same institutions are often the most burdened by new regulatory requirements.
Further, he noted that in recent years the NCUA has added policies that credit union boards must review and approve. “It is starting to get to the point where entire board meetings are now taken up doing annual review and approval of policies, not leaving time for actual substantive discussion,” he wrote.
Moore echoed these sentiments, claiming credit unions are best suited to make their own management decisions and will do so without the intervention of the NCUA. “The NCUA should not substitute its own judgment for that of credit union management,” she wrote, “as only an individual credit union can determine the appropriate timing and extent of succession planning needed to preserve the health of the credit union and its members.”