It's Time for Spring Cleaning
Identify in your policies how long you’ll keep certain documents.
As spring approaches, we take stock of how much “stuff” we’ve accumulated and look for ways to dispose of it. It’s also a good time to ensure we keep what we need.
For credit unions, this includes a serious review of record retention policies and procedures. But this activity always raises questions: What’s unnecessarily taking up storage space? What can we destroy? What should we keep?
Your record retention policies and procedures can provide some guidance. Section 749.2 of NCUA Rules and Regulations provides that a credit union must have a “vital records preservation program.” That program addresses records related to disaster recovery, including a list of member accounts that show the balance for the most recent business day, as well as the credit union’s financial report, accounts, insurance policies, and investments.
Keep in mind that it might not be your “vital records” that are taking up space. But it’s likely the documents you must retain for compliance with other laws and regulations that are.
For compliance with other laws and regulations, your retention schedule may be dictated by individual laws and regulations (such as any of the alphabet regulations—Regulations Z, B, E, etc.), NCUA Part 749, or state laws. And, in some cases, retention is a matter of “best practice” as there’s no specific law or regulation that dictates how long you have to keep some documents.
Credit unions should not only identify in your policies and procedures how long you’ll keep certain documents, but in what format you’ll retain them. Regarding records other than vital records, NCUA Part 749 generally provides that credit union records may be retained in any format, so long as the format accurately reflects the record, the information remains accessible by persons entitled to access it, and the record can be reproduced by transmission, printing, or otherwise. Again, this may vary by state law or by the recommendations of your legal counsel.
Documents you should retain permanently, according to NCUA:
- Official records of the credit union, including the charter, bylaws, or amendments; certificates or licenses to operate under various government agency programs; and official instructions of a permanent character received from NCUA or other governmental agencies.
- Key operational records, including minutes of meetings of the membership, board of directors, credit committee, and supervisory committee; a copy of each financial report, 5300 call report, and the Credit Union Profile report; a copy of each supervisory committee audit and account verification; applications for membership and agreements; journal and cash records; general ledger; copies of members’ periodic statements or the individual share and loan ledger; bank reconcilements; and listing of records destroyed.
As for other retention requirements, consider these guidelines:
- Loan files may contain several documents with various retention requirements. For example, you must retain any flood hazard determination documents for the life of the loan, and you must retain documents provided under Reg Z for two years after the date the required disclosures were made or actions were taken. In addition, state law may affect how long you retain files for issues related to contract law.
- Employment and personnel records, as well as tax records, are subject to record retention requirements.
- Retaining several drafts of a document isn’t always necessary. Sometimes it’s best to retain only the copy you actually file, such as for currency transaction reports.
So, if it has been awhile since you did any spring cleaning of credit union records, now may be a great time to make more room in the storage area.