Can a Credit Union Kick You Out? Analyzing the NCUA’s Proposed Rule on Member Expulsion

The National Credit Union Administration (NCUA) recently proposed a rule that would allow federal credit unions (FCUs) to expel members for cause by a two-thirds vote of a quorum of the board of directors. This proposed rule is a significant change from the current process, which requires a two-thirds vote of the membership present at a special meeting called for that purpose.

The NCUA’s proposed rule is in response to the Credit Union Governance Modernization Act of 2022, which was enacted in March 2022 The Act gives FCUs the authority to expel members for cause, but it also requires the NCUA to develop a policy by which FCUs may adopt this authority

The NCUA’s proposed rule outlines the process for expelling a member for cause. including the following:

• Notice of the Expulsion Policy: FCUs must provide a copy of the NCUA’s expulsion policy to each member in written or electronic form.
• Expulsion Vote and Notice of Pending Expulsion: If the FCU’s board votes to expel a member, the member must be notified of the pending expulsion and the reason for the expulsion.
• Hearing: The member has 60 calendar days from the date of receipt of the notice to request a hearing from the board of directors of the FCU.
• FCU Board Vote: After the hearing, the FCU board of directors must hold a vote in a timely manner on expelling the member.
• Notice of Expulsion: If a member is expelled, the FCU must provide notice of the expulsion.

The NCUA is seeking comments on the proposed rule, including questions about the following:

• Whether the limitation of services policy should remain in the FCU Bylaws.
• Whether the final rule should include a standard disclosure for all FCU members separate and apart from the language in Article XIV.
• How prescriptive the NCUA expulsion policy should be regarding the content of the notice of expulsion.
• Whether the hearing must be in person.
• Whether the final rule should include an appeal right for members.

The NCUA’s proposed rule on member expulsion is a significant change that could have a major impact on credit unions and their members. It is important for credit unions and their members to be aware of the proposed rule and to submit comments to the NCUA.

Frequently Asked Questions

Q: Can a credit union kick me out?

A: Yes, a credit union can kick you out under certain circumstances. The NCUA recently proposed a rule that would allow FCUs to expel members for cause by a two-thirds vote of a quorum of the board of directors. This proposed rule is still under consideration, but if it is finalized, it would give FCUs more flexibility to expel members who engage in disruptive or abusive behavior.

Q: What are the reasons a credit union can kick me out?

A: The NCUA’s proposed rule lists several reasons why a credit union can expel a member for cause, including:

• Engaging in violent, belligerent, disruptive, or abusive behavior towards credit union staff, other members, or visitors.
• Threatening the safety of credit union staff, other members, or visitors.
• Causing financial harm to the credit union.
• Violating the credit union’s bylaws or policies.

Q: What can I do if I am facing expulsion from a credit union?

A: If you are facing expulsion from a credit union, you have the right to request a hearing from the board of directors. At the hearing, you will have the opportunity to present your case and explain why you should not be expelled. If the board votes to expel you, you will have the right to appeal the decision to the NCUA.

Additional Resources

• NCUA’s Proposed Rule on Member Expulsion
• Credit Union Governance Modernization Act of 2022
• NCUA’s Member Expulsion Policy

Disclaimer

I am an AI chatbot and cannot provide legal advice. The information provided above is for general knowledge and informational purposes only, and does not constitute legal advice. It is essential to consult with a qualified legal professional for any legal issues or concerns.