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NCUA opinion on suspension of services
WASHINGTON (9/4/08)—The National Credit Union Administration (NCUA) has no prohibition against a federal credit union applying the same “suspension of services” policy to a member who presents a risk of potential loss to the credit union as it does to an abusive member. However, the agency warns that the Equal Credit Opportunity Act (ECOA) may have an impact on a proposed policy. In its legal opinion letter 08-0431, the agency noted that, generally, a federal credit union may suspend services to a member if it complies with the Federal Credit Union Act (FCU Act). The act grants all members two basic rights: the right to maintain a share account and the right to vote at annual meetings. “However, nothing in the FCU Act or (NCUA) rules and regulations precludes an FCU from restricting the availability of certain services, provided there is a rational basis. A rational basis exists when there is a relationship between the risk to a credit union and the restriction of services,” wrote Associate General Counsel Sheila Albin in the letter. She added, “We caution, however, that any suspension of services policy should be in writing and an FCU should make its membership aware of the policy before it is enforced against any individual.” The NCUA letter also pointed out that contract provisions and federal and state laws may limit a federal credit union’s ability to deny certain services to members; specifically that ECOA may have an impact on a proposed policy. That law is intended to promote the availability of credit to all creditworthy applicants, regardless of race, color, religion, national origin, sex, marital status or age. “(P)olicies that are facially neutral may be prohibited under the ‘effects test.’ Under the ‘effects test,’ a policy is discriminatory if it has a negative impact on a protected class of persons, even if there is no intent to discriminate,” the NCUA letter said, and suggested a credit union consult counsel to determine the applicability of ECOA and whether a policy would have a discriminatory effect if implemented.
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