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The NCUA Monday issued a Letter to Credit Unions to remind institutions of the 2021 final rule related to credit union service organizations (CUSOs) that expanded the list of permissible activities and services.

Under the rule, the list of CUSO permissible activities and services now includes originating any type of loan that a federal credit union may originate. It also provides the NCUA Board with additional flexibility to approve other permissible activities and services, though the agency has not yet approved any others outside of the rule.

The NCUA has created a Guidance Statement that addresses some of the primary related risks, which the agency noted varies depending on whether the credit union is a sole owner, investor, lender, or customer of the CUSO. The risks highlighted include:

• credit risk;
• strategic risk;
• compliance risk;
• fair lending;
• unfair, deceptive, or abusive acts and practices (UDAAP); and
• reputation risk.

The agency also cautioned credit unions to stay mindful of consumer financial protection risks that CUSO-originated loans may pose and properly address them.

The Letter to Credit Unions includes an Examiner’s Guide for managing CUSO relationships and associated risks, as well as a link to the NCUA’s CUSO Activities page.