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The NCUA has proposed sweeping updates to its long-standing records preservation regulation, targeting a reduction in compliance burdens while ensuring credit unions can continue serving members after a catastrophic event.

The proposal would streamline the agency's "Records Preservation Program" rule, which requires federally insured credit unions to maintain vital records necessary to restore operations if records are destroyed by disasters such as hurricanes, fires or other emergencies. The rule has existed in various forms since the early 1970s.

Under the proposal, the NCUA would clarify definitions related to "vital member services" and "vital records," while modernizing the rule to reflect current data storage practices, including cloud and digital systems. Credit unions would continue to be required to maintain a written vital records preservation program that includes procedures for storing duplicate records off-site and maintaining a log identifying stored records. 

One of the most significant changes would eliminate two appendices to the regulation that previously provided record retention and disaster preparedness guidance. According to the agency, many credit unions treated the appendices as binding requirements rather than guidance, which created confusion and unnecessary compliance costs. 

According to the NCUA, industry commenters had also raised concerns that recommendations to permanently retain certain records resulted in excessive storage costs and operational complexity.

The NCUA said the proposed rule is designed to maintain safeguards while allowing credit unions greater flexibility in determining how long records should be kept and how they are stored.

The agency is accepting public comments on the proposal for 60 days following publication in the Federal Register.

Sidebar: Executive Takeaways for Credit Unions

  • Permanent retention guidance may disappear. The NCUA proposes eliminating recommendations that some records be kept permanently.
  • More flexibility on retention policies. Credit unions would be able to determine retention timelines based on legal requirements and operational needs.
  • Guidance vs. regulation clarified. Removing appendices aims to reduce confusion over what examiners consider mandatory.
  • Digital and cloud storage affirmed. The rule explicitly allows records to be preserved in electronic formats.
  • Vendor oversight emphasized. Credit unions must maintain oversight of third-party providers storing vital records.
  • Core disaster recovery rule remains. Credit unions must still maintain programs ensuring vital records can be restored after a catastrophic event.

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