Field of membership (FOM) is constantly one of the topics NAFCU’s compliance team is asked about. These questions run the gamut from helping credit unions understand the language in their charters to figuring out how a credit union can expand its membership base. Today’s blog is a roundup of a few of the common questions we get on the federal FOM rules. As NCUA’s field of membership rules only apply to federal credit unions, state-chartered credit unions with similar questions will want to review any applicable state laws or guidance from the appropriate state regulator.
We are a multiple common bond credit union with a number of SEGs and associations in our field of membership. Do customers of these businesses or associations qualify for membership?
Unfortunately, customers do not fall within either of these common bonds. Chapter 2, Section II.A.1 of the NCUA’s Field of Membership Manual (Manual) requires all occupational common bonds to be based on employment. As customers are not employees of the business, they do not qualify for membership based on their relationship with a SEG.
Chapter 2, Section III.A.1 of the Manual explains an associational common bond includes only “members and employees of a recognized association.” The Manual provides an eight factor test to determine whether a group has an associational common bond and includes a list of twelve groups that NCUA has already determined to meet this test. NCUA also provides some examples of groups that do not meet the associational common bond test. The Manual explains that those “associations based primarily on a client-customer relationship do not meet associational common bond requirements.” The Manual states “customers of Fleetwood Insurance Company” is an example of an unacceptable associational common bond because “customer/client relationships do not meet associational standards.” As a result, customers of a business would also not meet the associational common bond test.
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