Final CUSO rule for credit unions takes effect next month

A final rule that affects the types of service organizations in which credit unions may invest, and to which they may lend, was published in the Federal Register Wednesday with ah effective date of Nov. 26.

The final rule permits such CUSOs to originate any type of loan that a federal credit union (FCU) may originate. It also allows the NCUA Board to add services to the list of permissible CUSO activities outside of notice-and-comment rulemaking. The final rule, included on the agency’s open meeting agency by the board’s two Republican members (Vice Chairman Kyle Hauptman and Board Member Rodney Hood), was approved by the National Credit Union Administration (NCUA) Board on a vote of 2-1, with its chairman (Todd Harper), a Democrat, casting the “no” vote.

CUSO activities reportedly are subject to federal and state consumer financial protection requirements, but the NCUA currently has no direct supervisory authority over the entities. Instead, it requires credit unions to include in their contracts with CUSOs provisions to give the NCUA access to CUSO books and records and the ability to review CUSO internal controls.

Reg lookup: Credit Union Service Organizations (CUSOs)