Advisories
Advisory 6
Loan Approvals - Directors
A number of credit unions have suggested that the
wording of the model Loans Policy discriminates
against the Directors and Committee members by requiring
their loans to be approved by the Credit Committee.
The underlying reason for this requirement is to
avoid situations where undue influence or pressure
may be brought to bear on a Manager because of the
Employer/Employee relationship.
In order to protect the Manager and yet allow the
timely processing of Director and Committee member
loans, your Board may wish to modify your Capital
Utilization Policy such that the Manager in conjunction
with at least one other individual who is not an
employee may approve the loan and report to the
next meeting of the Credit Committee. For example,
one Board has requested that the Manager together
with one of the President, Vice-President, Credit
Committee Chair or Audit Committee Chair may approve
Director or Committee member loans within the limits
established by the Board for the Manager in dealing
with other members' loans. It would require agreement
by both and if either had difficulty approving the
loan, it was to be sent to the Credit Committee
for a decision.
Should your Board wish to modify this section of
their policy, you should forward the request to
change to our office.
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