It’s Not Me, It’s You: For Federal Credit Unions, breaking up with problematic members just got easier to do
By: Heather Line, UCUA Compliance Guru
FCU Bylaws Govern Member Expulsion
Until recently, expelling disruptive members from Federal Credit Union (FCU) membership was difficult. FCU’s only had two options for expulsion:
Neither of these options worked well for expelling violent, disruptive, abusive (but participating) members. The best a FCU could do is deny services and/or prohibit in person transactions and hope the problematic member would quit.
A New Expulsion Option
On July 20, 2023 the NCUA Board unanimously approved a final rule that amended the standard federal credit union bylaws to permit a third way to expel a member. Under this new option, a FCU can adopt a policy by which a member may be expelled “for cause” by a two-thirds vote of a quorum of the credit union’s board of directors.
Work is Still Required
FCU’s that wish to implement the new expulsion option, still have to jump through some hoops:
What about State Chartered Credit Union’s?
Credit Unions chartered by Utah’s Department of Financial Institutions may terminate a person’s membership in the credit union according procedures stated in their respective bylaws. The Utah Credit Union Act also permits state chartered Credit Unions to close accounts of any member that causes a loss to the credit union.