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How can federal credit unions use this authority to expel a member for cause? First, understand that you’re not required to do anything as a result of the changes to the Federal Credit Union Bylaws. Taking action is optional.
If a federal credit union would like the flexibility to use the expel-for-cause option, it should take certain “housekeeping” steps prior to using this authority. These steps include:
If a federal credit union decides to expel a member for cause, it must meet notification and timing requirements prior to finalizing the expulsion.
A member subject to expulsion must be notified of the pending expulsion and the reason for this action. The notice of pending expulsion should include relevant dates, how the member violated the agreement or engaged in dangerous or abusive behavior, how to request a hearing, hearing procedures, and compliance processes.
It should also address the effect the expulsion may have on the member’s accounts or loans.
The member must have 60 days from the receipt of the notice of the pending expulsion to request a hearing with the board of directors.
Timing requirements must be followed, so credit unions should consider using a mailing option that provides a record or proof that notices were delivered.
If a member doesn’t request a hearing, the board of directors can vote to expel after 60 calendar days have passed from the member receiving the notice of the pending expulsion.
However, if the member requests a hearing, the board’s vote to expel should occur within 30 calendar days of the hearing.
If the member fails to appear at the hearing, the board can vote on expulsion.
Once the expulsion vote takes place and the member is expelled, the credit union must notify the member of the expulsion and that their membership with the credit union has been terminated.
Tailor the termination notice to the specific member with information such as:
Make sure the credit union keeps any records pertaining to the expelled member and their expulsion for six years.
NANCY DeGRANDI is manager of federal compliance information and research at Credit Union National Association. Contact CUNA’s compliance team at cuna.org/compliance.