Compliance Blog

Posted by Anthony Demangone

Earlier this month, NCUA issue Letter to Federal Credit Union 10-FCU-03 to provide guidance and its expectations concerning the sale of nondeposit investments by federal credit unions.  As you'll see when you read the guidance, that last sentence is a bit misleading, as FCUs really cannot sell these nondeposit investments.  They need to work with a third party, such as a CUSO, use a shared employee who somehow magically works for two employers - the credit union and the third party brokerage firm - depending on what the employee is doing, or by simply acting as a "finder" to point the member to a third party brokerage firm when necessary. 

This letter zaps and replaces an older piece of guidance - Letter to Credit Unions 150.  I'm not going to link to it, as that guidance was, well, zapped and replaced.  Forget about it.  Do not even mention its name.  If your credit union offers the sale of nondeposit investments, the guidance NCUA issued this month is what you must reference. 

Much of the guidance discusses due diligence efforts and the importance of internal controls.  They even talk about some contract issues if you sign a contract with a third party.  The guidance gets into advertising and disclosure issues as well, as these products are not backed by NCUSIF share insurance protection.  

If your credit union offers nondeposit investments, you need to read and understand this guidance.  It is only 8 pages in length, and it is written in English, not Legalese.  

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Regulation C Asset Exemption.  The Fed has issued its annual Regulation C/HMDA asset threshold exemption adjustment.  It will be $40 million, effective January 1, 2011.  I always like this announcement, because it means Old Saint Nick is not far away.