Expansion of Permissible CUSO Activities and Associated Risks

Dear Boards of Directors and Chief Executive Officers:

On November 26, 2021, the final rule amending NCUA regulation part 712 – Credit Union Service Organizations (CUSOs) went into effect. The final rule expands the list of permissible activities and services for CUSOs to include originating any type of loan that a federal credit union may originate and grants the Board additional flexibility to approve permissible activities and services.

Given the new rule has been in effect for more than a year now, the agency has produced the enclosed guidance statement to remind credit unions of the expanded opportunities to work with CUSOs and to address some of the primary related risks. Based on a credit union’s relationship with a CUSO, whether sole owner, investor, lender, or customer, the level and types of risk may vary. Credit unions also need to remain mindful of and properly address any consumer financial protection risks that CUSO-originated loans pose.

For additional guidance on managing CUSO relationships and associated risks, see the CUSO section of the Examiner’s Guide.

The NCUA has also established a CUSO Activities page on our website. The agency will post to this web page any new activities approved beyond those listed in the current rule. Currently there are no approved activities outside those included in NCUA regulation § 712.5, What activities and services are preapproved for CUSOs?¹

Please contact your regional office if you have any questions about this subject.