The president/CEO of a South Carolina member business lending CUSO said the NCUA is moving in the right direction with its proposed new CUSO rules.
In an effort to protect credit unions from losses, the NCUA board proposed Thursday a rule that would require all CUSOs to file financial reports directly with agency and the appropriate state supervisory authority. The proposal would also make additional parts of the CUSO rule applicable to federally insured, state-chartered credit unions as well as federal credit unions.
“If CUSOs are to remain viable third-party vendors for credit unions, particularly MBL CUSOs, we must find common ground with the NCUA in its efforts to create a safer and more transparent credit union industry,” said Michael Gudely, president/CEO of Innovative Business Solutions in Fort Mill, S.C.
Gudely pointed out that he does not favor additional regulation but recognizes CUSOs “operate in a largely unregulated industry” while credit unions “operate in a highly regulated industry.”
“We should work collectively to address the breadth of the regulatory gap, rather than deny the gap exists and insist we should operate outside any regulatory guidance our client credit unions are subject to,” Gudely said.
Still, the great majority of MBL CUSOs do a “respectable and responsible” job providing services to credit unions, Gudely offered. However, a few have not and their actions have resulted in material losses, he added.
“As MBL CUSOs, we encourage transparency and full disclosure from credit union members in evaluating credit requests. In that regard, to be against financial reporting to the NCUA and or state regulatory authorities would seem to be somewhat hypocritical.”
Gudely acknowledged that his stance may not sit well with some.
“I realize this isn’t a popular stance with my CUSO peers but they need to look around and recognize the actions of a few MBL CUSOs [that] threaten our continuing business with credit unions,” he said.