Credit Union Regulatory Guidance Including: NCUA, CFPB, FDIC, OCC, FFIEC

Samantha: Hello, this is Samantha Shares.

This episode covers N C U A’s Advanced
Notice of Proposed Rulemaking on

Records Preservation Program and
Appendices – Record Retention Guidelines;

Catastrophic Act Preparedness Guidelines

The following is an audio version of
that A N P R and the press release.

This podcast is educational
and is not legal advice.

We are sponsored by Credit Union
Exam Solutions Incorporated, whose

team has over two hundred and
Forty years of National Credit

Union Administration experience.

We assist our clients with N C
U A so they save time and money.

If you are worried about a recent,
upcoming or in process N C U A

examination, reach out to learn how they
can assist at Mark Treichel DOT COM.

Also check out our other podcast called
With Flying Colors where we provide tips

on how to achieve success with N C U A.

And now the A N P R.

Records Preservation Program and
Appendices – Record Retention Guidelines;

Catastrophic Act Preparedness Guidelines

SUMMARY: The National Credit Union
Administration Board is issuing this

advance notice of proposed rulemaking
(A N P R) to solicit comments on ways

the agency can improve and update its
records preservation program regulations

and accompanying guidelines in Part 7 4
9 of the AGENCY regulations (Part 7 4 9).

The Board is particularly interested
in obtaining stakeholder input on the

content of Part 7 4 9, which has not been
updated in 15 years and may be outdated

or at odds with current best practices.

The Board is also interested in
feedback on the structure of Part

7 4 9 which may be confusing as it
currently contains a combination of

regulatory requirements and guidance.

SUPPLEMENTARY INFORMATION:

I.

Background

II.

Current Standards and Request for Comment

III.

Legal Authority

I.

Background

In 2023, the AGENCY received
feedback that Part 7 4 9 and its

appendices are burdensome and unclear.

Based on this feedback and other factors
described below, the AGENCY has identified

the need to review Part 7 4 9 to see if
any changes or improvements are necessary.

The Board recognizes the AGENCY’s
regulations in this area, which were

last updated many years ago, may be
outdated or unclear for some credit

unions, which ultimately may have
adverse effects on their members.

Thus, the Board is seeking advance
comment on whether there is a need

to update Part 7 4 9, and if so, what
should be updated and how, to ensure

that credit unions continue to properly
preserve records vital to their business

operations, the AGENCY’s supervisory
needs, and the needs of their members.

II.

Current Standards and Request for Comment

Part 7 4 9 requires all federally
insured credit unions (credit unions) to

maintain a records preservation program
to identify, store, and reconstruct

vital records in the event that a
credit union’s records are destroyed.

Part 7 4 9 requires a vital records
preservation program to be in writing

and contain certain procedures for
maintaining duplicate vital records

at an offsite vital records center.

The regulation defines the term
‘vital records’ as: (a) a list of

share, deposit, and loan balances for

each member’s account as of the close of
the most recent business day that shows

each balance individually identified by
a name or number; lists multiple loans

of one account separately; and contains
information sufficient to enable the

credit union to locate each member, such
as address and telephone number; (b)

a financial report, which lists all of
the credit union’s asset and liability

accounts and bank reconcilements, current
as of the most recent month-end; (c)

a list of the credit union’s accounts
at financial institutions, insurance

policies, and investments along with
related contact information, current

as of the most recent month-end; and
(d) emergency contact information for

employees, officials, regulatory offices,
and vendors used to support vital records.

At the same time, Appendix A – which
is included in Part 7 4 9 as suggested

guidelines for record retention – advises
that the following additional sets of

records should be retained permanently: 1.

Official records of the credit union:
(a) Charter, bylaws, and amendments;

(b) Certificates or licenses to operate
under programs of various government

agencies, such as a certificate to act
as issuing agent for the sale of U.S.

savings bonds.

2.

Key operational records:

(a) Minutes of meetings of the membership,
board of directors, credit committee,

and supervisory committee; (b) One
copy of each financial report, AGENCY

Form 5300 or 5310, or their equivalent,
and the Credit Union Profile report,

AGENCY Form 4501, or its equivalent
as submitted to the AGENCY at the end

of each quarter; (c) One copy of each
supervisory committee comprehensive

annual audit report and attachments;
(d) Supervisory committee records of

account verification; (e) Applications
for membership and joint share account

agreements; (f) Journal and cash record;
(g) General ledger; (h) Copies of the

periodic statements of members, or

the individual share and loan
ledger; (i) Bank reconcilements; and

(j) Listing of records destroyed.

Credit unions have expressed confusion
regarding the interaction between

Part 7 4 9’s requirements and Appendix
A, and between Part 7 4 9 and other

parts of the AGENCY’s regulations that
have record retention requirements

not referenced in Part 7 4 9.

Under Part 7 4 9, certain supervisory
committee documents are not vital records

and are subject to periodic destruction;
yet under § 7 1 5 point 8 the supervisory

committee must retain the records of
each verification of members’ passbooks

and accounts until the completion of
the next member account verification.

The Board seeks comment on all aspects of
Part 7 4 9 and the Appendices, including

how they can be modernized, streamlined,
and clarified, and other provisions

in the AGENCY’s regulations that
contain record retention requirements.

The Board also encourages credit
unions and other stakeholders that

have developed well-functioning records
preservation programs to comment on

what works for them and share their best
practices in response to this notice.

In addition, the Board
specifically requests feedback

addressing the following areas:

A.

PART 7 4 9 DEFINITIONS

Questions:

1) Does the definition of vital records
in t CwelveFR 7 4 9 point 1 contain

all, and only those, records you would
consider to be vital for credit unions?

2) Are there additional types of
documents not listed as a “vital

record” that you think should be
as they are critical for business

operations and to properly serve members?

3) Are there other industry standards
or methodologies outside of Part 7

4 9 that the agency should consider
for preserving vital records, for

defining what vital records are, and for
determining minimum retention periods?

4) The primary focus of the
records retention guidance in

Appendix B relates specifically
to catastrophic act preparedness.

Are there any terms, definitions,
or standards that the Board should

consider updating in Appendix B?

5) Are there any other changes to
Appendix B that you would recommend?

B.

RECORDS RETENTION PRACTICES

Understanding current credit union
retention practices would be helpful in

determining whether Part 7 4 9 is properly
serving its purpose which is for a credit

union to identify, store, and reconstruct
vital records in the event that the

credit union’s records are destroyed.

Questions:

6) How long, and in what format, does
your credit union store its vital records?

7) Does your credit union maintain
and store any vital records in a

physical format due to a regulatory
requirement or supervisory expectation?

8) What impediments, including
estimated costs, does your credit union

encounter with storing vital records?

9) What records do you deem vital
for business operations that a

credit union should be required to
keep permanently for the purpose

of restoring vital member services?

10) Other than for records that must
be kept permanently, are there specific

timeframes you would recommend that
other vital records be retained?

11) What are the pros and cons of
storing vital records physically,

electronically, or in other formats,
such as cloud computing storage?

12) Does your credit union rely on
third-party vendors to accurately

maintain vital records, and if so,
what are some of the challenges

that these arrangements present?

13) How would you suggest the agency
create a more effective framework for

credit unions to preserve vital records?

14) What are some challenges for
smaller credit unions, defined as

credit unions with total assets of
$100 million or less, in maintaining

vital records, and what has worked?

15) What additional support, training,
or technical assistance could the AGENCY

provide, if any, to assist credit unions
with both understanding and implementing

records retention requirements?

C.

ADDITIONAL GUIDANCE

The issuance of guidance in this
area has been a long-standing agency

practice to assist credit unions with
their record preservation obligations.

As noted in an earlier rulemaking
on Part 7 4 9, “there is a need for

guidance in the area of record retention
based on the frequency of requests

for assistance from credit unions.”
Additionally, clearer guidance in

this area would also allow AGENCY to
better execute its supervisory duties.

As part of meeting this need, the
agency has taken steps over the

years to clearly state the difference
between regulations and guidance.

In a prior rulemaking on Part 7 4 9,
the Board attempted to clarify this

issue by stating, “The Board has weighed
the fact that guidance is available

from other sources and the potential
for confusion regarding enforceability

of a regulation versus guidance.

The Board believes the benefit to credit
unions in having the guidance in the

appendix to the regulatory requirement
will enhance access to the guidance

and will facilitate compliance.”10 In
the Part 7 4 9 rulemaking, the Board

further noted that “including specific
words like ‘recommended’ and ‘guidance’

means, as a legal matter, that the
guidance is just that—guidance—and

is not enforceable as a regulation.

These words clarify and minimize, to
the extent linguistically possible, the

potential for misinterpretation.” The
AGENCY recently codified this position in

an interagency rulemaking clarifying the
distinction between a rule and guidance

whereby the former creates binding legal
obligations, and the latter does not.

Questions:

16) What provisions of Appendix
A or Appendix B do not align

with the requirements of Part 7
4 9, or are otherwise outdated or

unclear examples of the types of
records that should be retained?

For records you consider
outdated, please explain why.

17) In terms of the content of any future
guidance, what guidance would be helpful

to better reflect the types of records
that must be retained under Part 7 4 9?

18) What guidance would be
helpful for catastrophic act

or other disaster preparedness?

19) Is there confusion among stakeholders
regarding the enforceability of regulation

versus guidance concerning Part 7 4 9?

If so, what should be revised?

D.

OTHER AGENCY REGULATIONS

Questions:

20) Are there other provisions in
the AGENCY’s regulations that contain

record retention requirements that
should be incorporated into Part 7 4 9?

III.

Legal Authority

The Board issues this A N P R pursuant
to its authority under the Federal Credit

Union Act (FCUA) to prescribe rules and
regulations as it deems appropriate for

administering the FCUA, including its
recordkeeping requirements for federal

credit unions.13 Maintaining vital
records is central to a credit union’s

ability to properly service its members
and to the AGENCY’s ability to fulfill

its supervisory and enforcement duties.

Section 209 of the FCUA
is a plenary grant of

regulatory authority to the Board to
examine and require information and

reports from credit unions as well as
issue rules and regulations necessary

or appropriate to carry out its
roles as regulator and share insurer.

Section 206 of the FCUA requires the
agency to impose corrective measures

whenever, in the opinion of the
Board, any credit union is engaged in

or has engaged in unsafe or unsound
practices in conducting its business.

Accordingly, the FCUA grants the Board
broad rulemaking authority to ensure that

credit unions, their member owners, and
the National Credit Union Share Insurance

Fund remain safe, sound and protected.

This concludes the A N P R.

If your Credit union could use assistance
with your exam, reach out to Mark Treichel

on LinkedIn, or at mark Treichel dot com.

This is Samantha Shares and
we Thank you for listening.