NCUA Proposes Changes to Catastrophic Act Reporting

NCUA Proposes Changes to Catastrophic Act Reporting

The National Credit Union Administration has issued a proposed rule that would revise how federally insured credit unions report catastrophic acts. The proposal is framed as a targeted burden-reduction effort, designed to give credit unions more flexibility during real-world disruptions while maintaining safety and soundness.

The proposal focuses on timing, reporting logistics, and recordkeeping expectations — not on redefining what qualifies as a catastrophic act.

What the Proposed Rule Does

NCUA’s proposal makes three primary changes to the existing catastrophic act reporting regulation.

First, it would change who receives the report. Instead of requiring credit unions to notify a specific regional director, the rule would require notification to “NCUA” generally. The agency says this would modernize and centralize the intake process, especially during emergency situations.

Second, it would extend the reporting deadline. Credit unions would have 15 calendar days to report a catastrophic act, rather than the current requirement of 5 business days.

Third, the proposal would simplify internal recordkeeping expectations. Rather than listing specific items that “should” be documented, the rule would require credit unions to prepare a record containing the basic facts of the event.

Why NCUA Is Making the Change

NCUA’s stated rationale is burden reduction during periods of operational stress. The agency acknowledges that catastrophic events often require immediate attention to recovery, continuity of operations, and member services.

By extending the reporting timeframe and removing prescriptive documentation language, NCUA says credit union management can focus on stabilizing operations and assessing impacts before completing regulatory reporting.

What It Means for Credit Unions

If finalized as proposed, the rule would give credit unions more flexibility during disruptive events.

Credit unions would have more time to submit a catastrophic act report, reducing pressure during the immediate aftermath of an incident. Reporting would be directed to NCUA generally, eliminating the need to identify a specific regional office during an emergency. Internal documentation requirements would be less prescriptive, allowing institutions to rely on existing business continuity and disaster recovery processes, as long as the basic facts of the event are recorded.

Importantly, the proposal does not change the underlying definition of a catastrophic act. A qualifying event would still need to involve physical destruction or damage, or an interruption in vital member services projected to last more than two consecutive business days.

Practical Steps to Consider

While the rule is still in proposed form, credit unions may want to consider a few practical steps.

Review your incident response and business continuity plans to ensure they clearly identify events that could qualify as catastrophic acts under the existing definition. Confirm that your internal documentation practices capture the basic facts of significant incidents in a consistent and defensible way. Monitor the comment process, particularly NCUA’s request for feedback on whether existing notification tools, such as cybersecurity incident reporting forms, should also be permitted for catastrophic act reporting.

Final Thoughts

This proposal is a narrow but practical adjustment to an existing requirement. It gives credit unions more time, clearer reporting direction, and greater flexibility in documentation, while keeping the core safety and soundness framework intact.