CUNA asked NCUA to continue to review its rules governing credit union service organizations (CUSOs) to achieve greater regulatory relief in a letter sent Monday. CUNA also reiterated its long-time stance that NCUA should not have examination and enforcement authority over third-party vendors, including CUSOs.
CUNA’s letter was sent in response to an NCUA request to the Office of Management and Budget for approval of a change in the estimated compliance burden on federally insured credit unions associated to agency regulations on CUSOs.
Specifically, Part 712 of NCUA’s rules and regulations includes a requirement that federally insured credit unions enter in a written agreement with a CUSO that stipulates the CUSO will follow generally accepted accounting principles, prepare quarterly financial statements, grant NCUA access to the CUSO books and records and annually report directly to NCUA via a CUSO registry.
“While additional information regarding the calculation of this burden estimate would be helpful, we agree with NCUA that the significantly lower number of CUSOs will, or at least in theory should, result in a correspondingly significant reduction of hours necessary to comply with the requirements detailed in part 712,” the letter reads. “We ask NCUA to continue to review these rules and regulations in an effort to achieve an even greater reduction in the compliance burden on FICUs that choose to utilize the services of CUSOs.”
CUNA also noted that “it is accepted that the Federal Credit Union Act does not provide NCUA with direct oversight of third-party vendors” and also notes NCUA Chairman J. Mark McWatters’ Oct. 2 testimony before the Senate Banking Committee acknowledging this lack of authority.
“NCUA has effectively managed this risk within its current regulatory authority. Credit unions are required to perform due diligence on their third-party vendor relationships, and this due diligence is already subject to supervision by NCUA,” CUNA’s letter reads. “As such, CUNA opposes legislative changes aimed at establishing NCUA authority in this area.”