NCUA Board Seeks Comments on Loan Compensation

The National Credit Union Administration (NCUA) Board approved one item at its April 2019 meeting: an advance notice of proposed rule-making (ANPR) on possible changes to the agency’s regulation governing compensation in connection with loans and lines of credit to members  -- Part 701.21(c)(8). The regulation covers direct or indirect commissions, fees, or other compensation by credit union officials, employees, or their family members in connection with loans made by the credit union.

According to the ANPR, “[t]hese regulations have generated confusion and are likely outdated, burdensome, and at odds with industry standards.”

The Board is considering modernizing the regulation as part of the agency’s regulatory reform agenda.

The NCUA is particularly interested in the following areas:

  • Providing greater flexibility on compensation plans associated with lending while controlling related risks;
  • Determining loan metrics, such as loan volume, as part of compensation plans; and
  • Defining the structure and understanding industry standards for such plans.

Comments are due to NCUA within 60 days after the ANPR’s publication in the Federal Register.