Guidance is not a regulatory requirement; Interchange
Posted by Anthony Demangone
I try to monitor a number of different websites related to credit union operations.  You never know where a compliance nugget or two will surface.  One of the websites I monitor is that of NACUSO.  Recently, NACUSO published a series of communications to and from NCUA regarding Letter to Federal Credit Unions 10-FCU-03.  As you may recall, that guidance document discussed NCUA expectations for federal credit unions who establish and operate third party brokerage arrangements for sales of nondeposit investment products.
Read the NACUSO posting here.  For credit unions that offer nondeposit investment products, be sure to read the post, including NCUA's response.  But I will highlight one paragraph that caught my eye.  And it was written by NCUA's General Counsel, Robert Fenner.Â
As a preliminary matter, you should note that 10-FCU-03 is guidance recommending best practices for FCUs involved with third party brokerage arrangements; it does not carry the weight or force of formal regulation. Indeed, the first sentence of 10-FCU-03 expressly states that "[t]he purpose of this letter is to provide guidance to federal credit unions on the establishment and operation of third party brokerage arrangements for the sale of of nondeposit investment products." (Emphasis added.) The letter does not impose regulatory requirements on FCUs.
This distinction is so very important, and I'm glad that Mr. Fenner raised it in his response to NACUSO. Â I also would recommend that NCUA make such letters publicly available for the entire credit union industry. Had NACUSO not taken the proactive step to publish NCUA's response, we would not have seen the useful information.
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