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NCUA's Proposed Rule on Succession Planning - Entire Rule
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Board Approves Revised Proposal on Succession Planning
The NCUA Board approved by a vote of 2-1 a proposed rule
that requires boards of directors at federally insured credit unions to establish and adhere to processes for succession planning. This new proposed rule modifies the 2022 proposal
based on the public comments received and upon further consideration of the issues.
“Succession planning is vital to the long-term success of any institution, including credit unions,” Chairman Harper said. “A credit union board’s failure to plan for the transition of its management and key decision-makers could come with high costs, including the potential for an unanticipated merger of the credit union when key personnel depart. In my view, it’s better to maintain many small credit unions serving a wide variety of purposes and niche markets than continuing to consolidate credit unions into ever larger institutions.”
Under the revised proposal, boards of directors at federally insured credit unions would be required to establish written succession plans that address specified executive and other positions. Additionally, each board of directors would be required to review the succession plan in accordance with a schedule it establishes, but no less than annually. The plan would be required to address the credit union’s strategy for recruiting candidates to assume each of the key positions and promote the credit union’s safe and sound operation.
The NCUA Board encourages all credit unions, regardless of asset size, to have a succession plan to fill key positions and ensure continuity of their operations. These succession plans should be consistent with the size and complexity of the credit union. The proposed rule includes a suggested succession plan template
(Opens new window) that may be appropriate for smaller credit unions.
Comments on the proposed rule must be received no later than 60 days following publication in the Federal Register.
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