Washington DFI Issues Bulletin on Unexcused Board Absences

The Washington State Department of Financial Institutions recently issued Interpretive Letter I-14-02 regarding when a board member is disqualified from serving on a board due to unexcused absences.

Under Washington statute, if a director is absent from more than one-fourth of the regular board meetings in any 12-month period in term without being reasonably excused by the board, the director shall no longer serve as a director for the period remaining in the term (RCW 31.12.235(2)(a)). The previous Interpretive Letter I-08-04rr addresses board unexcused absences bases on a credit union holding 12 regular monthly meetings.

The new Interpretive Letter addressees board absences if the credit union has changed its bylaws to allow the board to hold only six regular meetings each year, with at least one of these meetings held in each quarter. DFI has determined that under these circumstances, a board member can miss no more than one of the six calendar meetings.

However, providing the director satisfies RCW 31.12.255 and 235(b), the director may participate in the board meeting via a conference call, as long as reasonable safeguarding standards, such as receipt of meeting materials, ability to hear and participate, and continuous presence on the conference call are in place.

As the DFI concluded in the Interpretive Letter:

This interpretation pertains to a Washington state credit union that has changed its bylaws to require six regular board meetings each year, with one of these meetings held in each calendar quarter. A board member who has more than one unexcused absences per rolling twelve months will no longer be eligible to serve as a director for the remainder of his/her term. The board secretary is required to promptly notify the board member of his/her ineligibility to continue to serve. Vacancies on the board may be filled by an interim director appointment by the board, unless the interim director would serve a term of fewer than ninety days. See RCW 31.12.225(4) and (5) and RCW 31.12.235(2)(a) and (b).

Question of the Week

Is there a legal requirement to contact Adult Protective Services if a credit union has reason to believe that an elderly member may be a victim of abuse (financial, neglect, etc)?  

Although there is not a requirement to contact Adult Protective Services if a credit union suspects elderly abuse, it is suggested that the credit union do so. Any privacy concerns should be mitigated by the fact that the law shields people who report elder abuse in good faith from liability. The shield protects individuals even when the report is made over the phone.

Financial institution employees are considered permissive reporters. Permissive reporters may report to DSHS, Division of Finance and Corporate Securities, or a law enforcement agency when there is a reasonable cause to believe that a vulnerable adult is being financial exploited.

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Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance News, NCUA.