Home Info Compliance Member Expulsion Part 3: The Hearing, the Vote, and Requests for Reinstatement

Member Expulsion Part 3: The Hearing, the Vote, and Requests for Reinstatement

Authored By: JT Blau on 7/28/2023

Welcome back to our series on the NCUA's Final Rule on Member Expulsion! In Part 1 we covered the criteria for expulsion, and in Part 2 we walked through all the required notices involved in this process. Today we're looking at the expulsion hearing with the member, the Board vote, and requests for reinstatement. Let's dive in.

The Hearing

You've gone through the process and checked all the boxes. You've determined a member's behavior meets the criteria for expulsion. You've sent the Notice of Expulsion Policy to all of your members, and you've sent the Pending Expulsion Notice to your disruptive member. Now what?

As we noted in Part 2, the member has 60 calendar days from receipt of the Pending Expulsion Notice to request a hearing. Because the clock starts on receipt of that notice, it would be advisable to send the notice via certified mail or with a read receipt if sent electronically, so you can maintain a record of when it was received. If the member does not request a hearing or provide a written submission in that 60-day window, the member is automatically expelled. If a member does request a hearing, the Board of Directors must provide the member with a hearing.


The hearing can be either in-person or via videoconference, and that choice is made by the credit union. If the member cannot participate on video, the credit union may offer a telephonic hearing. The member may also choose to provide a written submission to the Board instead of a hearing with oral statements.

In the Supplementary Information to the Final Rule, the NCUA Board discusses that they believe an in-person hearing or a videoconference are the most appropriate formats for a hearing, and that telephonic hearings or written submissions are only appropriate if a videoconference or in-person hearing is not a viable option.

Hearing Procedures

The NCUA Board did not provide formal requirements related to the structure of the hearing. Matters such as the order of testimony, time limits, who may ask questions, and more are left up to the credit union. The NCUA Board believes each FCU should have the flexibility to conduct these hearings as they deem appropriate, so there are no standard procedures. The Board did clarify that the parliamentary procedure the Bylaws prescribe for meetings of members does not have to be followed for these expulsion hearings.

One question that was raised by the Proposed Rule was whether subsequent conduct could be raised during the hearing. In other words, can a member's behavior after they receive the Pending Expulsion Notice be discussed in the expulsion hearing? The Board ultimately determined that subsequent conduct can be discussed in the hearing, but only if it is related to the conduct outlined in the notice. For example, if the expulsion hearing is being held because of a member's abusive behavior, and they have continued to be abusive after receiving the Pending Expulsion Notice, that behavior can be part of the hearing. However, if they attempted fraud after receiving the Pending Expulsion Notice, that behavior should not be a part of the hearing because it is unrelated to what they were given notice for.

The Final Rule requires that the member be given a meaningful opportunity to present their case orally. While no additional details are given, NCUA expects hearings to be fair, reasonable and consistent. They also note that a member can file a complaint with NCUA or consider legal action if the FCU does not provide fair and reasonable hearing procedures.

The Vote

After a fair hearing, in which the member is provided a meaningful opportunity to present their case, the Board of Directors must take a vote on expulsion. The Final Rule requires this vote to be held within 30 days after the hearing. So the vote does not need to be taken during the hearing but should occur in a timely manner.

Expulsion of the member requires a two-thirds vote of a quorum of the Board of Directors. If the Board votes to expel the member, the credit union should prepare and send the Notice of Expulsion (see Part 2).

In the Proposed Rule, the NCUA Board considered whether they should provide formal appeal rights for members who are expelled. They ultimately opted not to adopt any formal appeal rights in the Final Rule, so the Board's vote is final.

Requests for Reinstatement

While there is no right to appeal the decision of the Board, the Credit Union Governance Modernization Act did provide that an expelled member must be given an opportunity to request reinstatement of membership. For example, if you expel a member, close all of their accounts, and then two years later you receive a letter from the member asking to be reinstated, what do you do?

First of all, a member is entitled to only one request for reinstatement. After the first one, an FCU is under no obligation to hold a vote to consider reinstatement of an expelled member.

When an FCU does get that first reinstatement request, they must consider it and hold a vote. There are three ways this vote can occur:

  • By the Board of Directors;
  • By membership at a special meeting; or
  • By the membership at the annual meeting, provided the annual meeting occurs within 90 days of the member’s reinstatement request.

If the vote is done by the Board of Directors, a majority vote of a quorum of the Board is what is required for reinstatement. If the vote is done by the membership at a special meeting, or annual meeting, a majority vote of those members in attendance is required for reinstatement, and an in-person vote is not required.

Finally, the Final Rule does not set a minimum time a member must wait before requesting reinstatement, nor did it set a maximum time beyond which they cannot be considered. The member can request reinstatement at any time, but they only get one shot at it.


Whew! We covered the format and procedure of the hearing, the vote, and how to handle a request for reinstatement.

So you've reviewed the process from start to finish, and you decide that this might be a useful tool for your credit union. What do you need to do before you start sending notices? Do you need to amend your bylaws? And is there another way to expel members or limit services to protect the credit union? That's next time on the final installment of our 4-part series on the NCUA Member Expulsion Rule.

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