NCUA seeks input on record retention

COMMENT CALL:  If you were at The League’s annual convention in La Crosse last week, and you had the chance to attend Office of Credit Unions Director Tom Theune’s breakout session, then you heard that the NCUA is asking for help modernizing its record retention guidance. This is welcome news, since credit unions tell us that they need clearer and less burdensome direction on record retention.
 
Specifically, the NCUA has asked for comments on how it can improve and update its records preservation program regulations and guidance. The agency says that it “is particularly interested in obtaining stakeholder input on the content of the regulation, which has not been updated in 15 years and may be outdated or at odds with current best practices.” They would also like feedback on the structure of Part 749 of their rules, “which may be confusing as it currently contains a combination of regulatory requirements and guidance.” 

What the NCUA’s Part 749 requires

Part 749 requires all federally insured credit unions to have a program for identifying, storing, and reconstructing vital records in case their records are destroyed. It defines “vital records” as:

1. A list of share, deposit, and loan balances for each member’s account as of the close of the most recent business day that shows each balance individually identified by a name or number; lists multiple loans of one account separately; and contains information sufficient to enable the credit union to locate each member, such as address and telephone number;
2. A financial report, which lists all of the credit union’s asset and liability accounts and bank reconcilements, current as of the most recent month-end;
3. A list of the credit union’s accounts at financial institutions, insurance policies, and investments along with related contact information, current as of the most recent month-end; and
4. Emergency contact information for employees, officials, regulatory offices, and vendors used to support vital records. 

At the same time, appendix A – which is included in part 749 as suggested guidelines for record retention – advises that “official records of the credit union” and “key operational records” should be retained permanently:
 
“Official records of the credit union” are: 

1. Charter, bylaws, and amendments;
2. Certificates or licenses to operate under programs of various government agencies, such as a certificate to act as issuing agent for the sale of U.S. savings bonds. 

“Key operational records” are: 

1. Minutes of meetings of the membership, board of directors, credit committee, and supervisory committee;
2. One copy of each financial report, NCUA Form 5300 or 5310, or their equivalent, and the Credit Union Profile report, NCUA Form 4501, or its equivalent as submitted to the NCUA at the end of each quarter;
3. One copy of each supervisory committee comprehensive annual audit report and attachments;
4. Supervisory committee records of account verification;
5. Applications for membership and joint share account agreements;
6. Journal and cash record;
7. General ledger;
8. Copies of the periodic statements of members, or the individual share and loan ledger;
9. Bank reconcilements; and
10. Listing of records destroyed. 

According to the NCUA, “Credit unions have expressed confusion regarding the interaction between part 749’s requirements and appendix A, and between part 749 and other parts of the NCUA’s regulations that have record retention requirements not referenced in part 749.” 

Make your voice heard

The League will submit a comment letter to the NCUA, but we need input from our credit unions. Does your credit union struggle knowing which records to retain and for how long? Could the NCUA improve its guidance to make your job easier? Can you recommend changes that would cut expenses for the credit union but still maintain reasonable protections for your operations and your members? What would you like to see changed?
 
The more specific you can be, the better. Any data or statistics you can supply would be welcome.
 
Please share your comments with Paul Guttormsson by June 17, so that our letter (which is due June 24) reflects your thoughts. We will not share your name or the name of your credit union in our letter. 

Questions presented

The NCUA has asked for responses to a set of 20 questions. Credit unions should not feel the need to answer each of them, but the more input provided, the better. For your convenience, here are those questions:

1. Does the definition of vital records in 12 CFR 749.1 contain all, and only those, records you would consider to be vital for credit unions?
    
2. Are there additional types of documents not listed as a “vital record” that you think should be as they are critical for business operations and to properly serve members?
    
3. Are there other industry standards or methodologies outside of part 749 that the agency should consider for preserving vital records, for defining what vital records are, and for determining minimum retention periods?
    
4. The primary focus of the records retention guidance in appendix B relates specifically to catastrophic act preparedness. Are there any terms, definitions, or standards that the Board should consider updating in appendix B?
    
5. Are there any other changes to appendix B that you would recommend?
    
6. How long, and in what format, does your credit union store its vital records?
    
7. Does your credit union maintain and store any vital records in a physical format due to a regulatory requirement or supervisory expectation?
    
8. What impediments, including estimated costs, does your credit union encounter with storing vital records?
    
9. What records do you deem vital for business operations that a credit union should be required to keep permanently for the purpose of restoring vital member services?
    
10. Other than for records that must be kept permanently, are there specific timeframes you would recommend that other vital records be retained?
     
11. What are the pros and cons of storing vital records physically, electronically, or in other formats, such as cloud computing storage?
     
12. Does your credit union rely on third-party vendors to accurately maintain vital records, and if so, what are some of the challenges that these arrangements present?
     
13. How would you suggest the agency create a more effective framework for credit unions to preserve vital records?
     
14. What are some challenges for smaller credit unions, defined as credit unions with total assets of $100 million or less, in maintaining vital records, and what has worked?
     
15. What additional support, training, or technical assistance could the NCUA provide, if any, to assist credit unions with both understanding and implementing records retention requirements?
     
16. What provisions of appendix A or appendix B do not align with the requirements of part 749, or are otherwise outdated or unclear examples of the types of records that should be retained? For records you consider outdated, please explain why.
     
17. In terms of the content of any future guidance, what guidance would be helpful to better reflect the types of records that must be retained under part 749?
     
18. What guidance would be helpful for catastrophic act or other disaster preparedness?
     
19. Is there confusion among stakeholders regarding the enforceability of regulation versus guidance concerning part 749? If so, what should be revised?
     
20. Are there other provisions in the NCUA’s regulations that contain record retention requirements that should be incorporated into part 749?