Association Urges NCUA to Reconsider Proposed Succession Planning Rule

In a recently submitted comment letter, the MD|DC Credit Union Association urges the NCUA to reconsider its proposed succession planning rule. The Association expressed concern that the proposed rule could inadvertently exacerbate industry consolidation and increase the regulatory burden on small credit unions.

In the letter, the Association acknowledges that effective succession planning is essential for a credit union's strategic planning process but cautions against the use of prescriptive rulemaking. The Association is urging the NCUA to instead provide guidance and issue Letters to Credit Unions, which would achieve the same goal without adding to compliance costs.

"We urge the NCUA to adopt this proven strategy and issue guidance rather than a rigid rule," the letter states, noting that other banking regulators have successfully addressed succession planning through guidance rather than formal rules.

The letter also addresses the broader issue of consolidation within the credit union industry, noting that the proposed rule cites outdated data to argue that the lack of succession planning has contributed to numerous mergers. The Association points out that the growing regulatory burden is a more significant factor driving consolidation, particularly for small credit unions that are already struggling to manage escalating compliance costs.

"Finalizing this proposed rule, which would add to the already heavy regulatory load, is not the solution. It will only hasten the consolidation it seeks to slow."

The MD|DC Credit Union Association remains committed to working collaboratively with the NCUA to ensure the safety and soundness of credit unions, while also advocating for policies that protect their ability to thrive.