Regulatory Advisory Bulletin on Restriction of Member Services
Issued 12/12/2018 by Superintendent Katie Averill
Recently, the Iowa Division of Credit Unions was advised of incidents of serious disruptions and bad behavior (including threats and verbal abuse) by credit union members and asked to provide guidance regarding how to respond.
Restriction of Member Services
Iowa Code Section 533.211 permits a credit union to immediately suspend or restrict services provided to members. If a member has caused a loss to the credit union, has violated the membership agreement or any policy adopted by the board, or has been physically or verbally abusive to credit union members or staff, then the credit union may suspend or deny services to the member. Iowa Code§ 533.211 (2018). The member is still permitted to maintain a share account, and vote at
the annual meeting (and any special meetings) and must fulfill applicable debt obligations. Iowa Code§ 533.211 (2018).
In addition to immediately suspending services, the credit union may expel a member, by majority vote of the board of directors, if the member has failed to carry out the obligations of membership or failed to comply with the bylaws or policies. Iowa Code§ 533.210(1) (2018). The Board of Directors may call a special meeting via telephone conference or in person and vote to expel the particular member. After a member has been expelled by majority vote of the board of directors, the member has the right to request a hearing before the membership. Iowa Code§ 533.210(2) (2018). The membership hearing is not required prior to a member being expelled under Iowa Code. The expelled member must affirmatively request the hearing. Iowa Code§ 533.210(2)(a) (2018).
If there is a hearing requested, the membership may confirm the expulsion or reinstate the expelled member by majority vote. However, the membership may articulate the terms and conditions with which the previously expelled member must now comply. Iowa Code § 533.210(2)(b) (2018). If the expelled member requests a hearing before the membership, the hearing must be held within sixty days of the request. Iowa Code§ 533.210(2) (2018).