Regulatory Alerts2011-04-13 | I-11-02DCU Interpretive Letter I-11-02: Reinstatement Under Once a Member Always a Member Principle
The Washington Department of Financial Institutions Division of Credit Unions clarifies that the "once a member, always a member" principle does not permit reinstating individuals who have terminated membership and no longer meet field of membership requirements. This principle only allows existing members to retain accounts after leaving the field of membership, provided the credit union's bylaws explicitly include the provision. An exception exists for reinstatement if the account closure was solely due to an administrative error and the principle was in place at the time of closure.
State of Washington DEPARTMENT OF FINANCIAL INSTITUTIONS DIVISION OF CREDIT UNIONS P.O. Box 41200 ● Olympia, Washington ● 98504-1200 Courier Address: 150 Israel Rd. SW ● Tumwater, WA ● 98501-6456 Telephone (360) 902-8701 ● TDD (360) 664-8126 ● (800) 372-8303 ● FAX (877) 330-6870 ● http://www.dfi.wa.gov
April 13, 2011
DCU Interpretive Letter I-11-02
RE: May an individual be re-instated as a member under the “once a member, always a member” principle
Dear:
You recently inquired whether a former member of [REDACTED] may be re-instated as a member, although the individual no longer meets the requirements in the field of membership of [REDACTED]. You asked if [REDACTED] may re-instate the individual under the “once a member, always a member” principle.
As you noted in your email dated February 24, 2011 to [REDACTED], an individual must meet [REDACTED] FOM requirements as described in the bylaws at the time of joining the credit union. In addition, we published an Interpretive Letter 99-3 explaining the “once a member, always a member” principle.¹ This principle allows an individual to continue his existing membership accounts after he leaves the field of membership (typically due to job change or a move out of state). For a Washington state chartered credit union to use the principle, the principle must be added to its bylaws in the field of membership appendix. In addition, I suggest the Board of Directors approve a resolution or provide information in the bylaws as to any requirements for a member to remain a member, such as maintaining a share account at the credit union or other reasonable standards, to qualify under the “once a member, always a member” principle.
This principle does not provide re-instatement for an individual after he terminated his membership with the credit union and no longer meets the field of membership requirements. However, if the closing of his credit union accounts was solely a mistake of [REDACTED] I have no objection to [REDACTED] reinstating a former member as long as [REDACTED] had “once a member, always a member” in place at the time the accounts were closed.
¹ For a copy of Interpretive Letter 99-3, see http://www.dfi.wa.gov/cu/opinions1999.htm#3 .
Page Two
Conclusion In conclusion, the “once a member, always a member” principle does not permit an individual to be re-instated as a member after:
- his membership has been terminated (typically by closing his accounts), and
- the individual no longer meets field of membership requirements in the bylaws. An exception is available if the closing of the account was solely a mistake of [REDACTED] and [REDACTED] had “once a member, always a member” in place at the time the accounts were closed. [REDACTED] should document the reasons for the mistake.
The Division of Credit Unions does not provide legal advice. This letter is intended to provide general guidance only and is not a substitute for legal advice to the credit union.
If you have any additional questions, I can be reached at linda.jekel@dfi.wa.gov or by phone (360) 902-8778.
Sincerely,
//s//
Linda Jekel Director of Credit Unions