Proposed Rule2026-03757
Credit Union Service Contracts
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
February 25, 2026
Issuing agencies
National Credit Union Administration
Abstract
The NCUA Board (Board) is proposing to revise its regulations governing the organization and operation of federal credit unions (FCUs) by eliminating a provision related to credit union service contracts. The Board intends to reduce administrative costs and compliance complexity with this revision, enabling FCUs to serve their members more efficiently.
Full Text
<html>
<head>
<title>Federal Register, Volume 91 Issue 37 (Wednesday, February 25, 2026)</title>
</head>
<body><pre>
[Federal Register Volume 91, Number 37 (Wednesday, February 25, 2026)]
[Proposed Rules]
[Pages 9185-9188]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-03757]
-----------------------------------------------------------------------
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 701
RIN 3133-AF83
Credit Union Service Contracts
AGENCY: National Credit Union Administration (NCUA).
[[Page 9186]]
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The NCUA Board (Board) is proposing to revise its regulations
governing the organization and operation of federal credit unions
(FCUs) by eliminating a provision related to credit union service
contracts. The Board intends to reduce administrative costs and
compliance complexity with this revision, enabling FCUs to serve their
members more efficiently.
DATES: Comments must be received by April 27, 2026.
ADDRESSES: Comments may be submitted in one of the following ways.
(Please send comments by one method only):
<bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
The docket number for this proposed rule is NCUA-2026-0434. Follow the
``Submit a comment'' instructions. If you are reading this document on
<a href="http://federalregister.gov">federalregister.gov</a>, you may use the green ``SUBMIT A PUBLIC COMMENT''
button beneath this rulemaking's title to submit a comment to the
<a href="http://regulations.gov">regulations.gov</a> docket. A plain language summary of the proposed rule
is also available on the docket website.
<bullet> Mail: Address to Melane Conyers-Ausbrooks, Secretary of
the Board, National Credit Union Administration, 1775 Duke Street,
Alexandria, Virginia 22314-3428.
<bullet> Hand Delivery/Courier: Same as mailing address.
Mailed and hand-delivered comments must be received by the close of
the comment period.
Public inspection: Please follow the search instructions on <a href="https://www.regulations.gov">https://www.regulations.gov</a> to view the public comments. Do not include any
personally identifiable information (such as name, address, or other
contact information) or confidential business information that you do
not want publicly disclosed. All comments are public records; they are
publicly displayed exactly as received and will not be deleted,
modified, or redacted. Comments may be submitted anonymously. If you
are unable to access public comments on the internet, you may contact
the NCUA for alternative access by calling (703) 518-6540 or emailing
<a href="/cdn-cgi/l/email-protection#662921252b070f0a260805130748010910"><span class="__cf_email__" data-cfemail="92ddd5d1dff3fbfed2fcf1e7f3bcf5fde4">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: Rachel Ackmann, Senior Attorney,
Office of General Counsel, at (703) 518-6540 or at 1775 Duke Street,
Alexandria, VA 22314.
SUPPLEMENTARY INFORMATION:
I. Introduction
A. Background
The NCUA originally issued rules related to FCUs entering service
contracts in the 1970s.\1\ In 1982, the rules governing service centers
and other FCU contracting activities were combined into one section
with the purpose of enhancing the scope of FCU contractual
agreements.\2\ Section 701.26 has remained largely unchanged since 1982
with one exception. A 1998 amendment removed a provision that treated
advance payments to a vendor for more than 3 months of service as an
investment in a credit union service organization, a change made to
reduce regulatory burden and provide FCUs with greater flexibility in
managing vendor contracts.\3\ Section 701.26 has not been amended since
1998.
---------------------------------------------------------------------------
\1\ 39 FR 44422 (Dec. 24, 1974).
\2\ 47 FR 30460 (July 14, 1982).
\3\ 63 FR 10756 (Mar. 5, 1998).
---------------------------------------------------------------------------
B. Legal Authority
Section 107(1) of the FCU Act gives an FCU the power to enter into
contracts.\4\ Additionally, the incidental powers provision of the
Federal Credit Union Act (FCU Act) expressly grants FCUs the power ``to
exercise such incidental powers as shall be necessary or requisite to
enable it to carry on effectively the business for which it is
incorporated.'' \5\ Accordingly, FCUs have broad authority to enter
into contractual agreements to perform or engage in activities that are
expressly authorized by the FCU Act or are incidental to the business
of credit unions.
---------------------------------------------------------------------------
\4\ 12 U.S.C. 1757(1).
\5\ 12 U.S.C. 1757(17).
---------------------------------------------------------------------------
Additionally, the FCU Act includes a general grant of regulatory
authority and it authorizes the Board to prescribe regulations for the
administration of the FCU Act.\6\ Therefore, the Board has authority to
regulate FCU contractual agreements.
---------------------------------------------------------------------------
\6\ 12 U.S.C. 1766(a).
---------------------------------------------------------------------------
Part 701 of the NCUA's regulations codifies these FCU Act
authorities and governs the organization and structure of FCUs,
including a wide range of operational activities. The part establishes
the framework for essential functions such as lending, governance,
member services, and ensuring that FCUs operate in a safe and sound
manner.
Section 701.26 addresses authority for an FCU to enter contracts
for assets or services that relate to its daily operations. The
regulation covers contracts with third-party vendors and other
organizations, including credit unions, that offer services to credit
unions. The regulation also allows one FCU to represent one or more
other credit unions or organizations in contractual arrangements with a
third party and authorizes the sharing of fixed assets.\7\ Agreements
must be in writing and must advise all parties subject to the agreement
that the goods and services provided are subject to examination by the
NCUA to the extent permitted by law. Section 701.26 does not give FCUs
the authority to provide services directly to other credit unions but
reflects authority to contract for assets or services that may be
offered to credit unions through shared service arrangements. That is,
Sec. 701.26 does not address FCUs directly offering services to other
credit unions.
---------------------------------------------------------------------------
\7\ Examples of where an FCU may represent another credit union
or organization include sharing of management services, loan
operations, and negotiations with vendors for shared services or
products. 47 FR 30460 (July 14, 1982).
---------------------------------------------------------------------------
II. Proposed Rule
The Board now proposes to remove Sec. 701.26. The authority for an
FCU to enter into contracts for operational services is inherent in its
charter and its general powers under the FCU Act. The regulation's
principal requirement--that such agreements be in writing--is a
standard business practice, which exists regardless of whether it is
mentioned in the NCUA's regulations. The Board continues to expect FCUs
to adhere to standard business practices and maintain safe and sound
practices regarding third-party contracts, including that all contracts
should be written.\8\ Thus, the regulation is superfluous, and its
removal will streamline the NCUA's regulations.
---------------------------------------------------------------------------
\8\ SL No. 07-01 (2007), available at <a href="https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/evaluating-third-party-relationships-0">https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/evaluating-third-party-relationships-0</a>.
---------------------------------------------------------------------------
The Board notes that Sec. 701.26 provides that all subject
agreements must advise parties of the NCUA's examination authority. The
Board believes this provision is unnecessary because the NCUA's
examination authority is generally limited to the products, services,
and operations of the credit union, not vendors that may supply
products and services. The NCUA will examine any such products and
services in relation to the credit union offering them. One exception
is related to the NCUA's access to credit union service organization
books and records that is included in part 712, but the Board does not
otherwise require credit union vendors to provide the NCUA access to
their books and
[[Page 9187]]
records.\9\ Accordingly, the Board does not believe the removal of this
requirement would result in a substantive change to current NCUA
policy.
---------------------------------------------------------------------------
\9\ 12 CFR 712.3(d).
---------------------------------------------------------------------------
The Board solicits comments on all aspects of the proposed rule.
Additionally, the Board solicits comments on the authority under Sec.
701.26 for FCUs, in joint operations and other resource sharing
situations, to act as a representative of another credit union or
organization. The Board has found that such FCU representation to be
authorized under the incidental powers provision of the FCU Act. The
authority, however, is not reflected in part 721.\10\ The Board
solicits comment on whether it is necessary to amend part 721 to
reflect this authority. The Board may amend part 721 in finalizing this
proposed rule if it finds an amendment necessary for clarity.
---------------------------------------------------------------------------
\10\ 12 CFR pt. 721. Section 701.26 does not give FCUs the
authority to provide services directly to other credit unions. 54 FR
48110 (Nov. 21, 1989). FCUs are authorized to provide their services
directly to other credit unions under various express powers and the
incidental powers clause of the FCU Act. For example, correspondent
services are services or functions provided by an FCU to another
credit union that the FCU is authorized to perform for its own
members or as part of its operation. Correspondent services are
expressly included in part 721. The existing provision related to
correspondent services is a separate and distinct activity from the
authority granted in Sec. 701.26. 66 FR 40845 (Aug. 6, 2001).
---------------------------------------------------------------------------
III. Regulatory Procedures
A. Providing Accountability Through Transparency Act of 2023
The Providing Accountability Through Transparency Act of 2023 (5
U.S.C. 553(b)(4)) requires that a notice of proposed rulemaking include
the internet address of a summary of not more than 100 words in length
of a proposed rule, in plain language, that shall be posted on the
internet website under section 206(d) of the E-Government Act of 2002
(44 U.S.C. 3501 note) (commonly known as <a href="http://regulations.gov">regulations.gov</a>).
In summary, the Board is proposing a rule to streamline its
regulations governing the organization and operation of FCUs by
eliminating a provision related to credit union service contracts. The
intended effect is to reduce administrative costs and compliance
complexity, enabling credit unions to serve their members more
efficiently.
The proposal and the required summary can be found at <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
B. Executive Orders 12866, 13563, and 14192
Pursuant to Executive Order 12866 (``Regulatory Planning and
Review''), as amended by Executive Order 14215, a determination must be
made whether a regulatory action is significant and therefore subject
to review by the Office of Management and Budget (OMB) in accordance
with the requirements of the executive order.\11\ Executive Order 13563
(``Improving Regulation and Regulatory Review'') supplements and
reaffirms the principles, structures, and definitions governing
contemporary regulatory review established in Executive Order
12866.\12\ This proposed rule was drafted and reviewed in accordance
with Executive Order 12866 and Executive Order 13563. OMB has
determined that this proposed rule is not a ``significant regulatory
action'' as defined in section 3(f)(1) of Executive Order 12866.
---------------------------------------------------------------------------
\11\ 58 FR 51735 (Oct. 4, 1993).
\12\ 76 FR 3821 (Jan. 21, 2011).
---------------------------------------------------------------------------
Executive Order 14192 (``Unleashing Prosperity Through
Deregulation'') requires that any new incremental costs associated with
new regulations shall, to the extent permitted by law, be offset by the
elimination of existing costs associated with at least 10 prior
regulations.\13\ This proposed rule is expected to be a deregulatory
action for purposes of Executive Order 14192.
---------------------------------------------------------------------------
\13\ 90 FR 9065 (Feb. 6, 2025).
---------------------------------------------------------------------------
C. The Regulatory Flexibility Act
The Regulatory Flexibility Act generally requires an agency to
conduct a regulatory flexibility analysis of any rule subject to notice
and comment rulemaking requirements, unless the agency certifies that
the rule will not have a significant economic impact on a substantial
number of small entities. If the agency makes such a certification, it
shall publish the certification at the time of publication of either
the proposed rule or the final rule, along with a statement providing
the factual basis for such certification. For purposes of this
analysis, the NCUA considers small credit unions to be those having
under $100 million in assets. The Board fully considered the potential
economic impacts of the regulatory amendments on small credit unions.
The proposed rule only removes an existing regulatory provision related
to FCU contracting. The regulation's requirement--that such agreements
be in writing--is a standard business practice, which exists regardless
of whether it is mentioned in the NCUA's regulations. The Board
considers the regulation to be superfluous, and its removal would
streamline the NCUA's regulations, thereby reducing burden.
Accordingly, the NCUA certifies the proposed rule would not impose
a significant economic impact on a substantial number of small credit
unions.
D. The Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) generally provides that
an agency may not conduct or sponsor, and not withstanding any other
provision of law, a person is not required to respond to, a collection
of information, unless it displays a currently valid Office of
Management and Budget control number. The PRA applies to rulemakings in
which an agency creates a new or amends existing information collection
requirements. For purposes of the PRA, an information-collection
requirement may take the form of a reporting, recordkeeping, or a
third-party disclosure requirement. The NCUA has determined that the
changes in the proposed rule do not create a new information collection
or revise an existing information collection as defined by the PRA.
E. Analysis on Executive Order 13132 on Federalism
Executive Order 13132 encourages certain agencies to consider the
impact of their actions on state and local interests. The NCUA, an
agency as defined in 44 U.S.C. 3502(5), complies with the executive
order to adhere to fundamental federalism principles. The proposed
changes would only apply to and affect FCUs and would not affect state-
chartered credit unions. The proposed rule would have no effect on
states or on the distribution of power and responsibilities among the
various levels of government. Therefore, the Board affirms it will not
affect the division of responsibilities between the NCUA and state
regulatory authorities with oversight of federally insured, state-
chartered credit unions.
F. Assessment of Federal Regulations and Policies on Families
The NCUA has determined that this proposed rule would not affect
family well-being within the meaning of section 654 of the Treasury and
General Government Appropriations Act, 1999. The proposed rule relates
to FCUs' contractual requirements, and any effect on family well-being
is expected to be indirect.
List of Subjects in 12 CFR Part 701
Advertising, Aged, Civil rights, Credit, Credit unions, Fair
housing, Individuals with disabilities, Insurance, Marital
[[Page 9188]]
status discrimination, Mortgages, Religious discrimination, Reporting
and recordkeeping requirements, Sex discrimination, Signs and symbols,
Surety bonds.
By the National Credit Union Administration Board, this 20th day
of February, 2026.
Melane Conyers-Ausbrooks,
Secretary of the Board.
For the reasons set forth in the preamble, the NCUA Board proposes
to amend 12 CFR part 701 to read as follows:
PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS
0
1. The authority citation for part 701 continues to read as follows:
Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759,
1761a, 1761b, 1766, 1767, 1782, 1784, 1785, 1786, 1787, 1788, 1789.
Section 701.6 is also authorized by 15 U.S.C. 3717. Section 701.31
is also authorized by 15 U.S.C. 1601 et seq.; 42 U.S.C. 1981 and
3601-3610. Section 701.35 is also authorized by 42 U.S.C. 4311-4312.
Sec. 701.26 [Removed and reserved]
0
2. Remove and reserve Sec. 701.26.
[FR Doc. 2026-03757 Filed 2-24-26; 8:45 am]
BILLING CODE 7535-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on February 25, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.