Access to Federal Credit Union Records

By Justin White, NAFCU Regulatory Compliance Counsel

Justin White, NAFCU Regulatory Compliance Counsel

Credit unions are required to keep records and meeting minutes, but some federal credit unions (FCUs) may not realize that members have a right to inspect these records. A member’s right to inspect applies to the FCU’s “books of account and other records” so long as the member has a “proper purpose for obtaining the records.” While Article XVI, Section 6 of the NCUA Model Bylaws establishes a member’s right to inspect the books and records and meeting minutes, the right to do so may create questions as to whether this applies to all books and records and what protections are in place to protect privacy interests.

A member’s right to inspect the FCU’s books and records, including the minutes of all board meetings may raise issues of confidentiality and privacy. Section 701.3(d) of the NCUA regulations limits access to a credit union’s books, records, and minutes of board proceedings by limiting the scope of what a member may inspect and by establishing procedural and substantive protections to avoid unnecessary disclosures.

Section 701.3 establishes the right of members to “inspect and copy nonconfidential portions of books and records of account and minutes of the proceedings of the credit union’s members, board of directors, and committees of directors.” Thus, the regulation limits a member’s ability to inspect books and records to only those portions which are not confidential. This raises the question of which portions of the FCU’s books and records may be deemed “confidential.” The preamble to the final rule which adopted the regulation discusses the regulation’s scope, and notes that it does not give members the right to inspect

any portion of an FCU’s [federal credit union] books, records, or minutes if Federal law or regulation prohibits disclosure of that portion, the portion contains nonpublic personal information as defined in [section] 716.3 [Dealing with Member Privacy]; or the portion contains information about credit union employees or officials the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.

The rule also does not permit members to inspect information relating to senior executive compensation and benefits. NCUA left access to information relating to senior FCU executives subject to the employee confidentiality rule. The employee confidentiality rule permits a “member… if they have a proper petition, [to] inspect employee information except for information the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.” The rule ensures FCUs have “reasonable discretion” to determine what employee information is kept confidential. The 2007 final rule indicates senior executive compensation could be protected under the employee confidentiality rule, but ultimately declines to reach a definite conclusion about whether or not executive compensation is protected from disclosure.

Several commenters did raise issues that the final rule does not do enough to protect board confidentiality. NCUA highlights several procedural and substantive protections that may limit the release of records that may harm the credit union. These protections include:

A minimum number of required petition signatures; limitations on the scope of the term “books and records of account” [to only all financial documents]; the requirement that the petitioners state a proper purpose; specific confidentiality provision for information related to members and FCU employees; and the authority of the [NCUA] regional director to impose restrictions on the inspection and copying of records.

NCUA included an added layer of security against inappropriate disclosure, prohibiting the release of any “books, records and minutes ‘the publication [of which] could cause the credit union predictable and substantial financial harm.’” The final rule does not present a uniformed definition of “substantial financial harm.” On the other hand, the final rule does present a non-exhaustive list of the types of information that would cause a “predictable and substantial financial harm” if released. This type of information includes: a credit union’s physical security plans, computer security plans, building schematics, and risk assessments.

Finally, it should be noted that the limitation on a member’s access to only “nonconfidential” records, however, does not apply to NCUA examiners. NCUA has stated that examiners have access to all board meeting minutes and records, even those that are otherwise protected by attorney-client privilege. The level of access varies between a group of members petitioning for records and examiners scrutinizing the credit union. If there are any remaining questions regarding access to board minutes or other credit union records, please do not hesitate to reach out to the NAFCU Compliance team. 

Justin White is regulatory compliance counsel for NAFCU.