NCUA has amended Rule 701.33 to prohibit federally chartered credit unions from indemnifying volunteers or employees from liability associated with certain forms of misconduct.
Sam believes concerns about potential lawsuits will encourage directors to pay more attention to financials and risk—but they could also make it more difficult to recruit volunteers.
To prevent problems, Sam encourages credit unions to examine their insurance policies and check bylaws related to indemnification. “The new requirement may lead to potential suits against board members should the credit union cause large losses to the insurance fund or if your credit union is conserved.”
But Read argues the financial skills rule could also make it easier to recruit volunteers seeking an opportunity to gain new skills. “We’ll help them get smarter.”
Keep it simple
Many credit unions mistakenly think they must participate in expensive, formal training programs to satisfy director financial literacy requirements, says Dan Morrisey, treasurer/CEO of $2 million asset Queen of Peace Arlington (Va.) Federal Credit Union.
Instead, Morrisey says credit unions can help directors achieve financial proficiency by linking them to flexible online training options, sharing educational materials they already own, or presenting information at board meetings.
Morrisey, for example, asks new directors to complete a recorded webinar called “CU Financials for Dummies” and then meets with them one-on-one to review the credit union’s balance sheet and income statement.
He also encourages board members to attend local chapter meetings, talk with other credit unions, and read industry publications to stay aware of current challenges and potential solutions.