Automation, better communication on process and a process for handling inquiries are recommended for the federal credit union regulator’s chartering process in an inspector general audit report released recently on the agency’s website.
The National Credit Union Administration (NCUA) Office of Inspector General (OIG), in its report dated Nov. 6, said it conducted its audit based on the OIG’s 2023 Annual Work Plan to assess the NCUA’s revised process to charter new federal credit unions.
The scope: The NCUA’s chartering activities from January 2019 through June 2024.
The objectives: Determine whether (1) the NCUA’s efforts to streamline its chartering process made it more efficient and effective for potential organizers interested in applying for a new federal credit union charter; and (2) the NCUA adequately communicated its revised chartering process to potential organizers.
In general, the OIG said overall that the agency’s chartering process operates within applicable laws, rules, policies and procedures; and that the agency “is adequately communicating” its revised chartering process to potential and current organizers.
However, it also said the OIG believes the agency should implement automated systems for the chartering process, including a phone logging system, to streamline and enhance the efficiency of the chartering process; that the deferral process for charter applications needs to be described on the NCUA website, including the number of times the NCUA may defer an application before denying it for insufficient information; and that the NCUA Board and senior management and the Office of Credit Union Resources and Expansion (CURE) need an established internal process to set expectations when handling charter applicants’ inquiries.
Agency management agreed with the specific recommendations:
- Develop a centralized system and institute a phone log system to modernize and streamline the chartering application process. (Management said the 2025-2026 draft budget includes an initial $1 million capital investment “for the development of requirements for a multi-year process automation project for field of membership and new charter requests.”)
- Quantify and clarify the deferral process for organizing groups by establishing clear guidelines and milestones to ensure enhanced transparency and understanding. (Management said it would do the evaluation and implement changes by Dec. 31, 2025.)
- Post detailed information about the NCUA’s charter deferral process on the agency’s website to clearly communicate expectations and provide organizing groups with a transparent and comprehensive understanding of deferrals within the charter application process. (Management said it will publish information about the new charter deferral process upon implementation of changes referenced in recommendation #2.)
- Establish a structured communication process within the NCUA’s federal credit union chartering process that sets expectations, timeframes, and ownership of responses to inquiries initially directed to the NCUA Board and/or NCUA senior management from charter organizing groups to ensure improved operational effectiveness and customer service. (Management said it plans to establish protocols that include expectations, timeframes, and ownership of responses to inquiries from charter organizing groups by June 30, 2025.)
Audit of the NCUA’s Federal Chartering Process (Report #OIG-24-09)