NCUA proposes to loosen fidelity bond approval rules for credit unions

Federally insured credit unions buy fidelity bond coverage under 12 CFR part 713, and the rule says who must approve each purchase or renewal. On 15 October 2026 the NCUA Board proposed to make that step lighter. The proposal amends 12 CFR parts 704 and 713, and NCUA says it "would apply to all FICUs, including state-chartered credit unions." The part 704 changes mirror the part 713 ones for corporate credit unions.

Comments "must be received on or before December 14, 2026." The docket is NCUA-2026-1882.

Who approves the renewal

Today § 713.2(b) needs the full board of directors to review every application to buy or renew fidelity bond coverage. The proposal would remove "the requirement that the FICU's full board of directors review all applications."

Under the revised text, the board "or a duly authorized individual who sits on the federally insured credit union's board of directors or supervisory committee or audit committee" must review and approve the application. Then "a non-employee who is either an individual board member" or an authorized supervisory or audit committee member "must sign the purchase or renewal agreement and all attachments."

Two details are easy to miss. The signer still can't be an employee, so a CEO who also sits on the board can't sign. And the delegation is to a named individual, so the board still has to make that authorization itself.

The signer rotation goes

A 2019 rule added a rotation: the same board member couldn't sign consecutive purchase or renewal agreements. The Board now calls this "an overly prescriptive requirement that creates an undue burden, particularly for smaller FICUs that may have a limited number of non-employee board members available to serve as a signatory." It proposes to remove it.

If you have a rotation schedule in your board calendar or your bond procedures, it would no longer be a regulatory requirement. You could keep it as your own practice.

Bond forms stop expiring after 10 years

Section 713.4(d) sets what NCUA calls "an automatic 10-year expiration period for the Board's approval of all fidelity bond forms." The Board says this is "a substantive requirement not found in the statute" and proposes to delete the paragraph in full. The same change is proposed for corporate credit unions in § 704.18(c)(3).

For a credit union, the practical effect is that the NCUA approval behind your bond form would no longer run out on a 10-year clock.

Two "should" paragraphs are removed

The proposal also strikes two paragraphs from § 713.5. Paragraph (b) says a FICU's board "should purchase" more coverage beyond the regulatory minimum as circumstances warrant. Paragraph (c) says FICUs "should maintain increased coverage" based on a formula tied to daily cash on hand or money in transit. The Board criticised that as "a rigid formula focused on only two specific criteria." The amendment text removes both paragraphs and renumbers the two after them. It doesn't add any new coverage amounts.

One part is unclear. The summary says the proposal would "simplify requirements for coverage amounts and deductibles," but the amendment text we read has no deductible provision. If deductibles matter to you, that is worth a comment asking NCUA to say what it intends.

NCUA expects the rule to be "a deregulatory action under Executive Order 14192." The notice doesn't say when a final rule would take effect.

What it could mean

For most credit unions this is a modest saving of board time, and we think it's a welcome one. Fidelity bond renewal is the sort of item that fills a board agenda without getting much real discussion. Handing it to one informed person on the supervisory or audit committee may produce a better review than a full board nodding it through.

The bigger change may be the loss of the § 713.5(c) formula. Some credit unions may have used it as a quick check on whether coverage had kept up with cash on hand. Without it, the judgment is yours, and your examiner may ask how you made it. If we were in a smaller credit union, we'd keep a short note each year on why the coverage amount still fits, even if the rule no longer asks for one.

Nothing changes until a final rule is out. Until then, keep following the current rule, and check whether your bylaws or board resolutions repeat the full-board approval step, because those would need their own update.