NCUA Unanimously Votes to Modernize FOM, Give More Americans Freedom to Choose

The NCUA Board voted 3-0 today to approve a new field of membership (FOM) proposal that, if adopted, would give millions more Americans access to not-for-profit financial services from credit unions.

“This is the first significant update to federal field of membership rules since 1998, while many states have recognized modernized FOM rules for years,” said Troy Stang, President and CEO of the Northwest Credit Union Association.” We’re glad to see the NCUA taking steps fully utilizing their statutory authority to provide American families the freedom they deserve to choose not-for-profit, cooperative financial services. There are some important changes included in this proposal, and we look forward to providing the NCUA with further recommendations after a full analysis.”

The Association called on credit union leaders and employees to respond quickly with comment letters to the NCUA. “It’s important to show the NCUA that they have our resounding support in moving FOM forward, even if the proposal still needs improvement,” said John Trull, AVP of Regulatory Advocacy for the Association. “Some camps will strongly oppose this change, just as they opposed a recent MBL rule and they opposed the last significant FOM change in 1998. The credit union voice needs to be louder than the voices of those who oppose giving Americans freedom to choose credit unions.”

The Association and CUNA have made it easy to send a comment with this simple online form. Use the message provided or customize it with your own thoughts. You can download the proposal here, and see the NCUA’s summary of proposed changes here.

Trull added that, although this rule directly applies to federal credit unions, it has an important impact on every credit union—federal and state charters alike. “When the federal charter is stuck decades in the past it can act as an anchor on state charters,” he said. “The more modern it becomes, the more momentum we have to make changes at the state and federal levels to allow credit unions to better serve their members. Plus, as more Americans have the freedom to choose credit unions, awareness of the value and impact of credit unions grows, and our collective advocacy becomes stronger, benefiting every single credit union, no matter its charter.”

The proposed rule, said Trull, is not a one-size-fits-all solution. Instead it includes a number of targeted updates to modernize regulations in areas where modernization is most needed.

Changes affecting community chartered federal credit unions include:

  • Combined Statistical Areas: A credit union will be able to serve up to 2.5 million people in a Combined Metropolitan Statistical Area (CMSA), as well as in a Metropolitan Statistical Area (MSA).  So a credit union’s field of membership could include parts of the Baltimore and Washington MSAs because they are all part of a larger Consolidated Metropolitan Statistical Area.  A community charter will no longer be required to serve the “core area” of a MSA or CMSA.
  • Bordering areas: A credit union will be allowed to expand into counties or other political jurisdictions that border (i.e. are immediately adjacent to) its existing FOM.  Only a streamlined version of a marketing and business plan will be required for community charters expanding into bordering areas.
  • Congressional Districts: Most members of Congress consider their Congressional Districts to be well defined local communities, so credit unions will be allowed to use a single Congressional District as a FOM.
  • Rural Districts: The population cap for a rural district (an area with an average population density of under 100 people per square mile) will increase from 250,000 to 1 million.  A rural district can include contiguous areas in the state where the CU is headquartered as well as contiguous rural areas in states adjacent to the state where it is headquartered.  New options will be provided to identify rural areas.   

Changes affecting SEG-based federal credit unions include:

  • Groups over 3,000: The proposal calls for a streamlined process for approving groups between 3,000 and 5,000, which are too small to support a viable stand-alone single-SEG credit union.
  • Independent Contractors: Multi-SEG credit unions will be able to serve independent contractors who regularly work at a SEG.
  • Reasonable Proximity Online: A SEG will be considered to be within reasonable proximity of a multi-SEG credit union if its members can make deposits, apply for loans, or receive loan proceeds through one of the credit union’s service facilities, which can include its web site or a mobile app.
  • Underserved Areas: The process for identifying and qualifying underserved areas will be streamlined and simplified. New options will be provided to identify and qualify underserved areas.  The ‘facilities test’ will no longer count facilities that do not serve the entire community.
  • Industrial Parks/Shopping Malls/Office complexes: A multi-SEG credit union will be able to serve employees who work at an Industrial Park/Shopping Mall/Office Complex without having to get approval from each individual tenant as long as the tenant does not have more than 3,000 potential members.

Trull said that further information and in-depth calls to action are forthcoming. The Association and its Regulatory Advisory Subcommittee will conduct a full analysis of the proposal and its impact, and keep member credit unions informed.

 Questions about this story? Contact James Pearson: 206.340.4790,

Posted in Advocacy News, CUNA, Federal, NCUA.