NCUA Issues ANPR Soliciting Comments on Improving and Updating the Records Preservation Program and Appendices

On April 24, 2024, the National Credit Union Administration (NCUA) published an advance notice of proposed rulemaking (ANPR) seeking comments on how the agency can improve and update its records preservation program regulations and guidance. The NCUA is also requesting input from stakeholders on whether there is a need to update Part 749, which has not been updated in 15 years, and which may be outdated and confusing as it currently contains a combination of regulatory requirements and guidance.  Comments must be received on or before June 24, 2024.

Part 749 of NCUA’s regulations requires that all federally insured credit unions (FICUs) maintain a written records preservation program to identify, store, and reconstruct the credit union’s vital records in the event they are destroyed, and provides recommendations for restoring vital member services.  In addition, a credit union’s records preservation program must include procedures for maintaining duplicate vital records offsite.

Maintaining vital records is central to a credit union’s ability to properly service its members and to the NCUA’s ability to fulfill its supervisory and enforcement duties. The current regulation at Part 749 defines “vital records” as: (a) a list of share, deposit, and loan balances for each member’s account as of the close of the most recent business day that shows each balance individually identified by a name or number; lists multiple loans of one account separately; and contains information sufficient to enable the credit union to locate each member, such as address and telephone number; (b) a financial report, which lists all of the credit union’s asset and liability accounts and bank reconcilements, current as of the most recent month-end; (c) a list of the credit union’s accounts at financial institutions, insurance policies, and investments along with related contact information, current as of the most recent month-end; and (d) emergency contact information for employees, officials, regulatory offices, and vendors used to support vital records.

Appendix A to Part 749 provides guidance concerning the appropriate length of time credit unions should retain various types of operational records. Appendix B to Part 749 provides guidance for developing a program for responding to a catastrophic act to ensure duplicate vital records can be used for restoration of vital member services.  Part of the confusion for credit unions is that Appendix A lists additional records that should be retained permanently that are not included in the list of vital records definition of the regulation. Also, other parts of the NCUA regulations have record retention requirements not referenced in Part 749. For example, §715.8 requires that the supervisory committee retain the records of each verification of members’ passbooks and accounts until it completes the next verification of members’ passbooks and accounts but under Part 749, certain supervisory committee documents are not vital records and are subject to periodic destruction.

In this ANPR, the NCUA seeks comment on all aspects of Part 749 and Appendices A and B, including how they can be modernized, streamlined, and clarified, and on other provisions in the NCUA’s regulations that contain record retention requirements. The NCUA also requests that credit unions and other stakeholders with well- functioning records preservation programs provide insight on what works for them and share their best practices in response to this document. In addition, the NCUA lists specific questions regarding any suggested updates or clarifications to the definition of vital records, what are some retention practices in place at credit unions, the pros and cons of storing electronically, physically, or in other formats, what provisions of Appendix A or Appendix B do not align with Part 749 or are otherwise outdated or unclear, what confusion exists regarding the enforceability of the regulation versus the guidance in Part 749, what other provisions in the NCUA’s regulations addressing record retention should be incorporated into Part 749, and other relevant questions.

America’s Credit Unions appreciates the NCUA’s effort to pursue this rulemaking, which was developed, in part, through recent feedback from America’s Credit Unions’ Small Credit Union Committee.

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