Fidelity bond requirements could pose problems for credit unions
WASHINGTON, DC (January 23, 2019) — Credit Union National Association (CUNA) filed a letter on Tuesday to raise concerns with certain aspects of the National Credit Union Administration (NCUA) proposed rule to amend fidelity bond regulations. Fidelity bonds are required for all federally insured credit unions to provide insurance coverage to credit unions against losses caused by credit union employees and officials, and by persons outside the credit union for losses such as embezzlement, fraud, dishonesty, theft, and other similar activities.
CUNA challenges the regulator’s assertion that requiring a mandatory option to extend the discovery period will not result in additional fees for credit unions. Instead, insurers will likely charge credit unions by increasing their premiums to account for the additional cost of claims.
Additional concerns are raised against the recommended mandate on board members, rather than management to sign fidelity bond applications. CUNA urges the NCUA to remove this provision from the final rule as credit unions are best positioned to determine whether management or their Boards have the expertise to sign and approve applications and renewals.
The letter concludes with support of the NCUA’s proposed rule to sunset its approval on all bond forms ten years after the form is approved. CUNA further encourages the NCUA to restart the ten-year period whenever the Agency chooses to review a form before the period would have originally expired.
Read the full letter here.
About CUNA
Credit Union National Association (CUNA) is the only national association that advocates on behalf of all of America’s credit unions, which are owned by 135 million consumer members. CUNA, along with its network of affiliated state credit union leagues, delivers unwavering advocacy, continuous professional growth and operational confidence to protect the best interests of all credit unions. For more information about CUNA, visit cuna.org. To find your nearest credit union, visit YourMoneyFurther.com.
