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.

No comments:

Post a Comment


The content is provided for educational purposes only, with the understanding that neither the authors, contributors, nor the publishers of this site are engaged in rendering legal, accounting or other expert or professional services. If legal or other expert assistance is required, the services of a competent professional should be sought.

Comments appearing in response to articles appearing on this site do not necessarily reflect the views of the ABA. ABA makes no representations regarding the truth or accuracy of commentary or opinions that may be posted in response to the articles that appear on this website.

The inclusion herein of any link to a website, either in the text of an article or in a comment, does not denote any approval, sponsorship, or endorsement by the ABA, and ABA is not responsible for the content or opinions expressed on those linked websites or related commentary. This content is not licensed to third parties sites and is not affiliated with any third party site. Any reference to the author or this content on any third party site on the Internet is not authorized by the ABA.

It is the policy of the American Bankers Association to comply fully with all antitrust laws. Certain discussions should be considered off-limits, including those that contain competitively sensitive data such as price and cost information, or statements that could be construed as reflecting an attempt or desire to control or influence a particular market or markets. Future pricing or other prospective competitive information should never be shared.