Happy Tuesday, compliance friends! Over the past few months, I have received quite a few questions on what the requirements are for retaining periodic statements, so I thought it may be helpful to write a refresher blog surrounding these requirements.
To start, NCUA provides general record retention guidelines that outline various record retention recommendations. This is found in Appendix A to Part 749, which states the following:
“E. What Records Should Be Retained Permanently?
…2. Key operational records that should be retained permanently are:
(a) Minutes of meetings of the membership, board of directors, credit committee, and supervisory committee.
(b) One copy of each financial report, NCUA Form 5300 or 5310, or their equivalent, and the Credit Union Profile report, NCUA Form 4501, or its equivalent as submitted to NCUA at the end of each quarter.
(c) One copy of each supervisory committee comprehensive annual audit report and attachments.
(d) Supervisory committee records of account verification.
(e) Applications for membership and joint share account agreements.
(f) Journal and cash record.
(g) General ledger.
(h) Copies of the periodic statements of members, or the individual share and loan ledger. (A complete record of the account should be kept permanently.)
(i) Bank reconcilements.
(j) Listing of records destroyed.” (Emphasis added).
Under Appendix A, NCUA recommends that copies of the periodic statements of members be retained permanently. Please note, the above guidelines from NCUA are only guidelines and not requirements. As Appendix A states, “NCUA does not regulate in this area, but as an aid to credit unions it is publishing this appendix of suggested guidelines for record retention.”
So, what other regulations touch on retention of periodic statements? For share accounts, section 1005.13(b) of Regulation E states:
“(1) Any person subject to the Act and this part shall retain evidence of compliance with the requirements imposed by the Act and this part for a period of not less than two years from the date disclosures are required to be made or action is required to be taken.”
Additionally, section 707.9(c) of NCUA’s Truth in Savings Regulation states:
“A credit union shall retain evidence of compliance with this regulation for a minimum of two years after the date disclosures are required to be made or action is required to be taken.” (Emphasis added).
What about periodic statements for loans? Regulation Z, section 1026.25, provides the following requirement:
“(a) General rule. A creditor shall retain evidence of compliance with this part (other than advertising requirements under §§ 1026.16 and 1026.24, and other than the requirements under § 1026.19(e) and (f)) for two years after the date disclosures are required to be made or action is required to be taken. The administrative agencies responsible for enforcing the regulation may require creditors under their jurisdictions to retain records for a longer period if necessary to carry out their enforcement responsibilities under section 108 of the Act.” (Emphasis added).
Another regulation that mentions statement record retention is Regulation X. Specifically, section 1024.38(c) requires that:
“(1) Record retention. A servicer shall retain records that document actions taken with respect to a borrower’s mortgage loan account until one year after the date a mortgage loan is discharged or servicing of a mortgage loan is transferred by the servicer to a transferee servicer.”
Overall, credit unions will want to use the above regulations as starting points. It is important to note that the NCUA guidelines on record retention recommend consulting with local counsel in setting recordkeeping requirements, as there may be applicable state law. For example, states have different laws regarding how many years someone has to file a lawsuit (statute of limitations). A credit union might decide to keep copies of member records, such as statements, until the statute of limitations has ended. This is just one example of a potential state law concern and counsel can help credit unions identify other state law requirements or practical concerns.