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FOM Rule Revisions Provide Greater Flexibility
Friday, November 11, 2016 6:35 AM

Changes to the Field of Membership rule remain a topic of great importance for federal credit unions that will have a broader pool of potential members. More Americans will become eligible for credit union products and services under a final rule (Part 701) approved by the NCUA Board to modernize NCUA’s field-of-membership regulations.

In recent years, several states have updated their FOM rules for state-chartered credit unions. Within the requirements of federal law, NCUA Board Member J. Mark McWatters said that the final rule would similarly enhance consumer access to credit by sensibly and reasonably updating NCUA’s rules.

Consistent with the limitations of the Federal Credit Union Act, the final rule updates key definitions and makes more than a dozen changes to NCUA’s chartering and FOM rule for federal credit unions by:

  • Allowing greater flexibility to community charter credit unions in how they define the local communities they serve
  • Providing credit unions with better opportunities to serve underserved areas by updating the process for defining those areas
  • Enhancing access to credit union services for residents of rural areas by allowing rural district credit unions to serve up to one million people
  • Streamlining paperwork for multiple common-bond credit unions that seek to serve additional groups, such as including independent contractors with a strong dependency relationship with an employee group
  • Expanding credit union access for honorably discharged members of the armed services by allowing them to join credit unions serving their active-duty counterparts.
  • The final rule also modifies the type and extent of information that a federal credit union must submit to support an application to expand its field of membership.

The final rule will become effective 60 days after publication in the Federal Register. A comparison chart summarizes changes made to the previous rule.