CU Trades: Simplified Member Expulsion Process Is Still Too Complex

Both CUNA and NAFCU have raised questions over a proposed NCUA rule intended to simplify the process of a credit union expelling a member. Learn why.

David Baumann


Dec 6



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David Baumann

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David Baumann

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CUNA and NAFCU weigh in on proposed NCUA rule regarding member expulsion, call for streamlined solution.

A proposed NCUA rule designed to make it easier for credit unions to expel members is still far too complicated, credit union trade groups told the agency late last week.

In March, Congress passed the Credit Union Governance Modernization Act (CUGMA), which allows credit unions to expel members for cause by a vote of two-thirds of a quorum of the board of directors. Previously, a membership vote had been required to expel a member.

The NCUA has now proposed adopting the policy, and both CUNA and NAFCU have raised concerns. 

“Credit unions desperately need a solution that provides them with a streamlined, straightforward mechanism for expelling problem members that is cognizant of the unique and varied nature of the credit union industry,” James Akin, NAFCU’s regulatory affairs counsel, told the agency. “This proposal is not that solution.”

CUNA agreed.

“We ask the NCUA to consider how it can be simplified and/or streamlined to reduce the chances of confusion and increase its usability, particularly in instances where an FCU attempts to utilize the rule’s flexibility in a time of possible stress, given the nature of circumstances surrounding member expulsion,” wrote Luke Martone, CUNA’s senior director of advocacy and counsel.

Inside the Comments


Akin said that credit unions supported the law enacted to make it less cumbersome to expel members, however noted that the agency’s rule implementing the legislation goes beyond what is required by law.

“The proposed rule introduces requirements, not found in CUGMA, that would turn the expulsion process into something closer to the due process afforded a student facing expulsion at a public university, than the termination of a consumer finance relationship,” he wrote.

The rule also does not go far enough in protecting credit union boards and employees, Akin continued, adding that a credit union’s board should be permitted to determine if a hearing required to expel a member should be held in-person, virtually or through written papers.

“The proposed rule would require that the hearing must provide the member with an opportunity to present their case,” he wrote. “The submission of written testimony is sufficient to provide this right.”


Martone wrote that CUNA disagrees with the suggestion that all credit union members be provided a notice regarding the proposed expulsion both by mail and electronically. Instead, he maintained that the notice should be provided in whichever way a member has elected to receive other notices.

He added further that a credit union’s board must hold an expulsion vote in a timely manner. However, while the proposed rule states that must occur within 30 days after a hearing, CUNA wants that timeframe extended to 90 days.

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