NCUA Fines Five Northwest Credit Unions for Late Call Reports; NWCUA Urges Regulator to Improve its Filing System

The National Credit Union Administration executed its “zero tolerance” policy for credit unions that filed late first-quarter call reports, by issuing financial penalties against 84 credit unions. One of the credit unions being fined is in Oregon and four are in Washington.

The NCUA Office of Examination and Insurance issued “Civil Money Penalties” against the 84 credit unions last week, with the steepest fine exceeding $10,000. If the five Northwest credit unions sign consent orders, their penalties will range from $243 to $1,900.

The regulator makes exceptions to its policy for credit unions able to document certain filing hardships including a breakdown in the credit union’s core operating system, a natural disaster taking place in the credit union’s community, or the incapacitation of a key employee who would be responsible for filing the report. If a credit union encountered a problem and contacted the help desk to report an issue with filing the report, the NCUA generally took this into account and waived the penalties, according to an agency spokesman.

The regulator’s action is “an expensive lesson for sure,” according to Ruth Bryson, Manager/CEO at Longshore FCU in Hoquiam, Washington. The credit union has fewer than 500 members.

“It doesn’t feel good, especially since we were cooperative about going to online filing when it first became available,” Bryson said. “And we have not had any issues with late filings, with the exception of, at the very beginning, when the NCUA could not handle everyone trying to access the system during the same timeframe.  However, it is true that neither person in our two-person office went online and verified the report was no longer in a pending status.”

The fines collected by the NCUA are remitted to the Treasury, and do not supplement the budget. As recently as September, 2012 one out of every seven credit unions filed late, with the NCUA committing significant budgetary resources following up with late filers, the regulator noted.

The Northwest Credit Union Association is asking the NCUA to better address issues with online filing.

“We’re asking the NCUA to remind credit unions a couple of days before the reports are due that the filing deadline is approaching,” said John Trull, director of the regulatory advocacy. “Furthermore, we are advocating for technical improvements to the system that would notify credit unions immediately upon hitting the submit button if there is an issue, or to confirm the report was received.”

Since 2009 an FPR has automatically been sent to the call report submitter as confirmation of successful submission, although not all credit unions were required to file online until January 24, 2014.

If credit unions provide evidence of previous on-time filing, Trull noted, they may be able to appeal the fine with the NCUA’s Office of Examination and Insurance. If the cost of the fine would materially harm the financial health of the credit union, Trull said, that would be another circumstance for the regulator to consider.

Trull offered personal assistance to credit unions having call report filing issues. Those credit unions may contact him directly to discuss questions or possible solutions.

The NCUA extensively messaged its intent to fine late filing credit unions. Since January, a spokesman noted, credit unions were notified of the policy, and warning letters were sent to credit unions that filed their December, 2013 reports late. The regulator also posted articles in the NCUA Report. Overall, the zero tolerance policy had its intended effect, with 98.4% of credit unions filing on time– the highest percentage since online filing began.

Posted in NCUA.