Written By JiJi Bahhur, Regulatory Compliance Counsel
NCUA will be discussing its final rule on credit union service organizations (CUSOs) at its next Board Meeting on June 21. As you may recall, the proposal has been around for about a year, but with the 290 or so comment letters received, including one from NAFCU, finalizing the proposal has required NCUA to take a look at some of its provisions as initially written in the proposal. The likelihood of potential changes to the original proposal stems from the fact that a large number of commenters opposed many of the agency’s proposed provisions.
As released last summer, the CUSO proposal:
- Would extend NCUA’s regulatory reach over CUSOs by requiring CUSOs to submit financial reports annually to the NCUA and state regulators. The reports would provide the regulators with financial information, a list of services the CUSO provides, a customer list, and information about the CUSO’s board and management.
- Would extend the CUSO rule, including the proposed financial reporting requirement, to CUSO subsidiaries.
- Would extend a number of provisions in the CUSO rule that only apply to federal credit unions to federally-insured state chartered credit unions (FISCUs) as well.
In a recent Washington Post article, NCUA Chairwoman Debbie Matz stated that some items for consideration before the proposal is finalized is the frequency of the reporting requirements and also giving CUSOs 60 days, rather than the proposed 30, to register with the agency. Other considerations will relate to placing parameters or limitations on the investment cap.
For more details on what the original proposal entails, here is the proposal from last summer. Affected sections of NCUA’s rules and regulations include Parts 712 and 741.222.
Some other resources on the matter:
- NAFCU’s Comment Letter (available to the public)
- NAFCU’s Regulatory Alert (available to members only)
- NAFCU's On-Demand CUSO Webcast (available to all credit unions, regardless of membership or charter type)