<p>WASHINGTON – The NCUA Board’s approval last year of its incidental powers regulation was hailed by credit unions for the increased service options it provides credit unions and the opportunity it affords them to boost earnings. But what are the regulation’s provisions and how can federal credit unions use them to better serve members needs? From questions CUNA’s Assistant General Counsel Mary Dunn has fielded from FCUs, it’s become apparent to her that there is some confusion about the incidental powers reg, and she has issued a report, “NCUA’s Incidental Powers Rule – How It Can Help Federal Credit Unions Serve Their Members Better” to explain the ABC’s of the rule. Some of the items in the NCUA’s incidental powers rule are not new to credit unions. “What is new is that now there are no regulatory limits on the amount of fee income that may be obtained from these kinds of arrangements,” Dunn wrote in the report sponsored by CUNA’s Federal Credit Union Subcommittee. Dunn referred to the incidental powers rule as “one of the most significant developments” affecting the regulation of credit unions. “It is under this rule that the agency allows federal credit unions to engage in activities that are not spelled out in the Federal Credit Union Act.” In addition to taking a look at the incidental powers rule and discussing the improvements it provides, the report also raises several issues credit unions should consider when considering offering new activities and provides them an assessment checklist to facilitate the process. What makes the incidental powers regulation special is that the rule “is designed to actually help federal credit unions serve their members. Also, it is not limited to federal credit unions that meet certain net worth or CAMEL rating requirements, it is applicable to all federal credit unions,” Dunn wrote. Under the rule, she states, there are no limits on the amount of compensation a federal credit union may receive from a third party vendor. “By facilitating the ability of a federal credit union to determine for itself what third party products and services are in its members best interests and by allowing a credit union to receive income limited only by the marketplace rather than the federal government, NCUA has provided federal credit unions with important options in keeping pace with their members’ needs and demands for financial services.” While Congress, through the Federal Credit Union Act, authorized the express powers federal credit unions are allowed to engage in, the incidental powers rule “recognizes the significance of so-called `incidental powers’ in ensuring the continued viability of credit unions and the agency’s pivotal role in determining what activities a federal credit union may engage in under this legal rubric.” Before the rule was passed, issues involving incidental powers were decided on a case-by-case basis. With the regulation in place now, the regulatory process has been simplified by centralizing the list of the types of activities that have already been approved by NCUA. “The beauty of the new rule is that is codifies what categories of activities are currently permissible and provides useful examples of the kinds of services each category includes.” A copy of Dunn’s report was sent to NCUA. It will also be available on CUNA’s Web site. -</p> <p>[email protected]</p>

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.


Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times

Copyright © 2024 ALM Global, LLC. All Rights Reserved.