The National Credit Union Administration board approved the final version of its succession planning rule by a vote of 3-0.

The rule will require federally-insured credit unions to establish succession planning for key positions in their organizations.

The rule will be effective Jan. 1, 2026.

Among changes to the rule as it was proposed in July are that credit union boards must review their succession plan no less frequently than every two years. The original proposal required an annual review.

Additionally, loan officers, supervisory committee members and credit committee members have been removed from the list of officials that must be covered by the succession plan.

The changes were intended to increase the flexibility of credit unions in complying with the new requirements, staff members said.

The NCUA said it received 187 comments on the proposal after the July meeting. Many of those responders acknowledged the importance of succession planning and agreed with the intent of the rule, if not all of the specific requirements.

A large driver for the rule was an NCUA analysis that found a lack of succession planning was either a primary or secondary cause for almost a third of consolidations.

NCUA Chairman Todd Harper said at the agency’s monthly board meeting Tuesday that none of the board members got everything they wanted in the final rule making, “but all of us got something that was important to us.”

So why is the issue important?

Because the best way to solve a problem is to prevent it, Harper said.

“It’s better for consumers and the system to have many smaller, diverse credit unions serving a wide variety of purposes, communities and markets instead of consolidating credit unions into fewer and larger institutions,” Harper said.

NCUA Vice Chairman Kyle Hauptman, who in July voted against the proposal, said the agency has now included language requiring the NCUA to reapprove the rule three years after its effective date.

That gives future NCUA boards the opportunity to review its effectiveness as well as its cost of compliance to the credit unions and the agency, he said.

Hauptman added that it is unlikely he will still be a member of the board in three years.

“I am still somewhat skeptical that this rule will [prevent mergers] – especially for smaller credit unions. Most regulations are harder for smaller credit unions. I’m also generally averse to words like ‘mandatory,’ or to new edicts that tell other people what to do and how to do it,” he said.

Hauptman said he worries about additional, ineffective burdens placed on already strained credit unions.

“My skepticism is solely about whether NCUA creating new paperwork for over 4,000 credit unions will actually yield a tangible result that exceeds the rule’s costs,” he said.

In other matters, the NCUA also recently handed out its fourth new charter of 2024.

The agency granted a federal charter to Soul Community Federal Credit Union in Austell, Georgia.

Soul Community will primarily serve people who live, work, worship, or attend school in the city of Austell, a low-income community, the regulator said.

Before Soul Community, the NCUA chartered only three credit unions both this year and in 2023, and since 2014 the regulator has only chartered 30 new credit unions.

Most recently, the agency in June chartered Fair Break Federal Credit Union in Memphis, Tennessee.

“If NCUA wants to preserve smaller credit unions, the best way to do that is to make running a small credit union less burdensome. If we can make that a more attractive job, then a lot of problems go away and Americans are more likely to have the choice to join a small credit union.”

 – Kyle Hauptman
Vice Chairman
NCUA