The National Credit Union Administration approved a rule on Thursday that would extend the agency’s regulatory reach over credit union service organizations, a move opposed by some trade groups.
The rule would require all CUSOs to report basic information to NCUA and state regulators on an annual basis, and organizations that engage in complex or high-risk activities will be required to report more in-depth details.
Additionally, the rule expands current rule requirements that apply to state-chartered credit unions to address accounting, financial statements and audits. The rule will take effect next June, and CUSOs will be required to begin submitting reports after the reporting system becomes fully operational by December 31, 2015.
Carrie Hunt, the senior vice president of government affairs and general counsel at the National Association of Federal Credit Unions, said the rule is unnecessary.
“NAFCU strongly opposes the final rule…and questions NCUA’s legal authority to, in effect, directly regulate CUSOs,” Hunt said. “It is unnecessary because the agency can already get the information it would receive under the rule. NAFCU continues to believe that this rulemaking stands on questionable legal grounds because the agency does not have the legal authority to oversee or supervise CUSOs.”
The Credit Union National Association has advocated for a different approach and has said the NCUA should ensure it does not extend its reach beyond its authority. CUNA said the NCUA should work with credit unions that use CUSOs to have them provide the information on CUSOs that the agency requires.