Written by Steve Van Beek
Two months ago NAFCU held a webcast on NCUA Share Insurance Coverage - Expectations and Disclosures. One of the questions from the live webcast was on noninterest-bearing transaction accounts and I wanted to share the Q&A with blog readers.
"Question: We have a question about the requirement to notify members if we alter their noninterest-bearing transaction account. Our credit union currently offers only noninterest-bearing transaction accounts – which are fully insured until December 31, 2012. If we added a new checking account which would offer dividends would we be required to notify members? What about if members switched from our noninterest-bearing transaction account to our new product that pays dividends?
Answer: Great questions. Let’s tackle them separately. For the first question, the credit union would not be required to notify members when you add a new product that pays dividends. Your members with the existing noninterest-bearing transaction account are not being impacted by the creation of the new product. The terms and conditions on the existing noninterest-bearing transaction account are not being altered and, thus, no notice would be required to the members. Those accounts will remain fully insured until December 31, 2012.
For the second question, the credit union would not be required to notify members that voluntarily close their noninterest-bearing transaction account and open an account that pays dividends. The credit union has not made a change to the terms of the noninterest-bearing transaction account and, thus, no notice would be required.
That being said, it would be a good member service to notify members that their decision to close their noninterest-bearing transaction account and move toward a dividend-paying transaction account could impact their share insurance coverage. While not required, this notification could be important – especially for members with large balances."
Without additional Congressional action, the unlimited share insurance coverage for noninterest-bearing transaction accounts will expire on December 31, 2012.
Note: We blogged on noninterest-bearing transaction accounts in the past as well: June 22, 2011; June 3, 2011; May 27, 2011; May 26, 2011; and May 24, 2011.
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Now for a long shameless plug that you might want to pass along to your Board or Supervisory Committee.
NAFCU's 31st Board of Directors and Supervisory Committee Conference. NCUA’s Inspector General William DeSarno and Deputy Inspector General Jim Hagen will be presenting at NAFCU’s 31st Annual Credit Union Board of Directors and Supervisory Committee Conference, May 16-18 in Palm Springs.
You might be wondering what does NCUA's Office of Inspector General do? Among other duties, they write the Material Loss Reviews (MLRs) which discuss what issues helped cause a credit union to fail or need a merger. These provide a great opportunity to learn from others (July/August 2010 Compliance Central from The Federal Credit Union magazine).
Additionally, Anthony has a great blog post today on NAFCU's CU Musings Blog which highlights some of the findings in these MLRs and looks at a common theme.
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The early registration deadline was Friday, March 23 – but I’m extending the $100 savings until this Friday, March 30 for blog readers (or anyone they pass the word on to). Use the code VCDIS for each registration from your credit union to save through Friday, March 30.
Board members and Supervisory Committee members who attend have the ability to earn certificates for both Bank Secrecy Act training and Financial Literacy training.
Additionally, I'll be presenting on the Consumer Financial Protection Bureau and you can be assured your Directors and Supervisory Committee members will receive the latest information about the CFPB's actions and how they will impact credit unions.
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