Guidance to address some primary related risks of working with credit union service organizations (CUSOs) is outlined in a letter from the federal credit union regulator issued late Monday.
In a letter to all institutions it regulates, the National Credit Union Administration (NCUA) said it was reminding credit unions of the “expanded opportunities” to work with the service organizations, which are typically wholly owned by one or more credit unions but are not depository institutions.
The letter notes that a November 2021 final rule expanded the list of permissible activities and services for CUSOs to include originating any type of loan that a federal credit union (FCU) may originate. The rule also granted the NCUA Board additional flexibility to approve permissible activities and services, the letter states.
“Given the new rule has been in effect for more than a year now, the agency has produced the enclosed guidance statement to remind credit unions of the expanded opportunities to work with CUSOs and to address some of the primary related risks,” the letter states. “Based on a credit union’s relationship with a CUSO, whether sole owner, investor, lender, or customer, the level and types of risk may vary. Credit unions also need to remain mindful of and properly address any consumer financial protection risks that CUSO-originated loans pose.”
NCUA Letter 23-CU-02 /Expansion of Permissible CUSO Activities and Associated Risks