The NCUA has confirmed that federal credit unions cannot charge periodic membership fees, according to a letter it sent to the American Bankers Association last month.
"FCUs may not charge periodic membership fees, but they may charge a uniform entrance fee and account or service-related fees," NCUA General Counsel Michael McKenna wrote in the letter, which was dated May 1, 2015. "In a 1993 Legal Opinion Letter, No. 93-0226, NCUA opined that the mention of the entrance fee without the mention of other membership fees forecloses on an FCU's ability to assess annual membership fees."
Entrance fees and fees for account services and other financial products don't count as membership fees, he said, and they can't serve as a condition for continued membership.
The opinion could affect how some credit unions do business. Arizona Federal Credit Union, which is headquartered in Phoenix and has $1.4 billion in assets and 125,000 members, implemented a $3 monthly membership fee in December 2012, for example. The credit union reportedly lost 15,000 members because of the fee and incurred criticism from some who said it wasn't consistent with the credit union movement. At the time, the credit union anticipated generating $5.4 million per year in new revenue from the fee.
Whether and how the NCUA will pursue Arizona FCU or other federal credit unions charging periodic membership fees is still unknown.
"NCUA handles regulation violations and takes appropriate actions on a case-by-case basis," NCUA spokesperson John Fairbanks told CU Times.
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