Boards of directors at federally insured credit unions (FICUs) would be required to establish and adhere to processes for succession planning under a proposed rule issued Thursday by the National Credit Union Administration (NCUA) Board.
The NCUA said the new proposal modifies one from 2022 based on public comments received “and upon further consideration of the issues.” Among the changes: it focuses not just on federal credit unions but also on federally insured, state-chartered credit unions.
Thursday’s proposal would require FICU boards to establish written succession plans that address specified executive and other positions. Each board would also be required to review the succession plan under a schedule established by the board, but at least annually. Included in the plan must be a strategy for recruiting candidates to assume each of the key positions and promote the credit union’s safe and sound operation.
The proposed rule also includes a suggested succession plan template that the agency said “may be appropriate for smaller credit unions.”
“The NCUA Board encourages all credit unions, regardless of asset size, to have a succession plan to fill key positions and ensure continuity of their operations. These succession plans should be consistent with the size and complexity of the credit union,” the agency said.
The rule was issued on a vote of 2-1 and is out for comment for 60 days following its publication in the Federal Register.
The board also on Thursday voted 3-0 to keep the federal credit union loan rate ceiling at 18% for another 18 months. The action is effective for the period from Sept. 11, 2024, through March 10, 2026.
The board’s last action approving the 18% cap is in effect through this Sept. 10.
NCUA Board Approves Proposed Rules on Incentive-based Compensation, Succession Planning