Tuesday, January 19, 2016

Community Chartered CU Uses a Foundation as Another Way to Join

The American Bankers Association (ABA) wrote the National Credit Union Administration (NCUA) on January 15th about Seaford, Delaware-based Sussex County Federal Credit Union (SCFCU) improperly using a foundation to add ineligible individuals to its field of membership.

The Federal Credit Union Act (FCUA) limits the common bond of a federal credit union to a single common bond, multiple common bond, or a community common bond.

SCFCU is a community chartered federal credit union serving Somerset County, Worcester County and Wicomico County of Maryland and Sussex County of Delaware.

But the credit union is using a foundation to qualify people for credit union membership who are not eligible for membership otherwise.

SCFCU’s website identifies the Sussex County FCU Foundation as "Another Way to Join." Individuals only need to pay $10 a year in dues to the foundation. The website further states that individuals "need not remain a member of the Foundation to retain credit union membership."

However, the FCUA does not permit a hybrid charter comprised of an association and community charter.

ABA requested that NCUA order SCFCU to cease the practice of allowing individuals, who are otherwise ineligible for membership, to join the credit union through the Sussex County FCU Foundation.

Read the letter.
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