Proposed Rule on Training for New Board Members

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NCUA Proposes to Eliminate Financial Literacy Training Deadline for New FCU Directors

The NCUA Board has issued a proposed rule that would remove the requirement that each federal credit union director attain a working familiarity with basic finance and accounting within six months of being elected or appointed.

What NCUA is proposing:

• Eliminate Section 701.4(b)(3), which currently sets a six-month deadline for new FCU directors to achieve working familiarity with finance and accounting, including the ability to read balance sheets and income statements and ask substantive questions of management and auditors.
• Redesignate the remaining paragraph accordingly.

Why the change is occurring:

• The Board now views the six-month rule as overly prescriptive.
• FCU members are in the best position to elect qualified directors.
• The Federal Credit Union Act gives each FCU board "general direction and control" but does not direct NCUA to set specific director qualifications.
• The proposal aligns with the administration's deregulatory priorities under Executive Order 14192.

What is NOT changing:

• The Board still believes directors must have a working familiarity with basic finance and accounting practices.
• NCUA will continue evaluating board and management capability through the CAMELS Rating System as part of risk-focused examinations.
• The broader fiduciary duties outlined in Section 701.4 remain in place.

The 10,000-foot takeaway: NCUA is stepping back from a prescriptive training deadline and putting the responsibility for director competency back where the Board believes it belongs — with the FCU itself and its members. Boards should not interpret this as a pass on financial literacy. Examiners will still assess whether directors can actually identify, measure, monitor, and control risk. If anything, this shifts the burden from "complete training within six months" to "demonstrate ongoing competence" — which is a higher bar in practice.

Comments are due April 27, 2026.

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What is Credit Union Regulatory Guidance Including: NCUA, CFPB, FDIC, OCC, FFIEC?

This podcast provides you the ability to listen to new regulatory guidance issued by the National Credit Union Administration, and occasionally the F D I C, the O C C, the F F I E C, or the C F P B. We will focus on new and material agency guidance, and historically important and still active guidance from past years that NCUA cites in examinations or conversations. This podcast is educational only and is not legal advice. We are sponsored by Credit Union Exam Solutions Incorporated. We also have another podcast called With Flying Colors where we provide tips for achieving success with the N C U A examination process and discuss hot topics that impact your credit union.

Samantha: Hello, this is Samantha Shares.

This episode covers Post-Election
Training for New Board Members.

The following is an audio
version of that document.

This podcast is educational
and is not legal advice.

We are sponsored by Credit Union
Exam Solutions Incorporated, whose

team has over two hundred and
forty years of National Credit

Union Administration experience.

We assist our clients with N C
U A so they save time and money.

If you are worried about a recent,
upcoming, or in process N C U A

examination, reach out to learn how they
can assist at Mark Treichel dot com.

Also check out our other podcast called
With Flying Colors where we provide tips

on how to achieve success with N C U A.

And now the document.

Summary.

The N C U A Board solicits public
comment on a proposal to eliminate

the regulatory requirement that each
director of a federal credit union,

an F C U, attain a working familiarity
with finance and accounting within 6

months after election or appointment.

The Board believes the regulation
is unnecessarily prescriptive.

Supplementary Information.

Introduction.

Background.

In a final rule published on
December 28, 2010, the N C U

A established section 701.4

to document and clarify
the fiduciary duties and

responsibilities of F C U directors.

This regulation was created to address
concerns about director accountability

and to ensure directors act in the best
interests of the F C U's membership.

Among other requirements, the
final rule set standards for

financial literacy for directors.

Specifically, section 701.4,

paragraph b, subparagraph 3, requires
that each director, at the time of

election or appointment, or within
a reasonable time thereafter, not

to exceed 6 months, have at least a
working familiarity with basic finance

and accounting practices, including
the ability to read and understand

the F C U's balance sheet and income
statement and to ask, as appropriate,

substantive questions of management
and internal and external auditors.

Legal Authority.

The Board is issuing this proposed rule
pursuant to its authority under the

Federal Credit Union Act, the F C U Act.

Under the F C U Act, the N C U A is the
chartering and supervisory authority

for federal credit unions, F C Us, and
the federal supervisory authority for

federally insured credit unions, F I C Us.

The F C U Act grants the N C U A a
broad mandate to issue regulations

governing both F C Us and F I C Us.

Section 120 of the F C U Act is
a general grant of regulatory

authority and authorizes the Board
to prescribe regulations for the

administration of the F C U Act.

Section 209 of the F C U Act is a plenary
grant of regulatory authority to the

N C U A to issue regulations necessary
or appropriate to carry out its role

as share insurer for all F I C Us.

The F C U Act also includes an express
grant of authority for the Board to

subject federally chartered central,
or corporate, credit unions to

such rules, regulations, and orders
as the Board deems appropriate.

Proposed Rule.

While the Board continues to
believe that directors must have

a working familiarity with basic
finance and accounting practices, it

proposes to eliminate section 701.3,

paragraph b, subparagraph 3.

Upon reconsideration, the Board
believes that the regulation

is overly prescriptive.

The members of an F C U are
in the best position to elect

qualified individuals to the board.

This policy determination is supported
by the fact that the Federal Credit

Union Act, while vesting each F C U
board with general direction and control

of the credit union at 12 U S C 1761 b,
does not direct the N C U A to establish

specific qualifications for directors.

Under the C A M E L S Rating System,
the N C U A will continue to assess

the capabilities of the board of
directors and management, in their

respective roles, to identify, measure,
monitor, and control the risks of

a credit union's activities and to
ensure a credit union's safe, sound,

and efficient operation in compliance
with applicable laws and regulations.

This concludes the document.

If your credit union could use assistance
with your exam, reach out to Mark Treichel

on LinkedIn or at Mark Treichel dot com.

This is Samantha Shares, and
we thank you for listening.