From the Archives: September 2013

Recent NCUA Letter Highlights Advantages of State Charter on FOM 

Recently, the NCUA published a letter to federal credit unions addressing what was perceived as overly aggressive marketing campaigns by federal credit unions portraying that membership to the credit union is “open to anyone.”  The NCUA letter went on to remind federal credit unions of the common bond requirements in the Federal Credit Union Act and NCUA rules, along with the NCUA rules for accuracy in advertising.

While the NCUA rules for accuracy in advertising apply to both federally chartered and state-chartered credit unions, the letter highlights the difference in approach regarding field of membership under state law and federal law. The Michigan Credit Union Act allows for combined, multiple types of fields of membership, and allows broad flexibility when mergers occur between credit unions with differing fields of membership. 

In addition to having a flexible state credit union law, Michigan credit unions have convenient access to the state Legislature and the Department of Insurance and Financial Services, which allows state-chartered credit unions a greater opportunity to affect public policy that impacts credit unions. The Michigan Credit Union Act also contains parity (or wild card) provisions that allow state credit unions to exercise any powers permitted to federal credit unions in cases where federal law is more progressive.

For a copy of NCUA’s communication on accuracy of advertising as it such relates to field of membership, click here.


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