On November 21, 2013, the National Credit Union Administration (NCUA) finalized new requirements for federally-insured credit unions that invest in or lend to credit union service organizations (CUSOs). While the rule predominately impacts CUSOs, credit unions do have their own requirements.
Mandatory Compliance Date
Credit unions that have invested in or lent to CUSOs must amend their agreements by June 30, 2014. A credit union must enter into a separate written agreement with each CUSO it has invested in or lent to. After June 30, 2014, any credit union loan to or investment in a new CUSO relationship must include these contractual provisions.
Scope & Applicability
The requirement to enter into written agreements with CUSOs applies to all federally-insured credit unions. The final rule extends specific accounting and auditing requirements to federally-insured state-chartered credit unions. Previously, these requirements applied only to federal credit unions.
Contractual Provisions
The CUSO rule strengthens NCUA's ability to oversee credit unions' relationships with CUSOs. As part of this oversight, credit unions must enter into formal, written agreements that require their CUSOs to report information to NCUA and any applicable state supervisory authority. Additionally, the agreement needs to outline specific accounting and auditing requirements the CUSO must follow.
Additional Information
Credit unions needing additional information and answers to frequently asked questions should download Howard & Howard's Regulatory Update on the Final CUSO Rule.
