ALEXANDRIA, VA. — NCUA has issued a document which consolidates its previously issued guidance about how federally insured credit unions should evaluate their relationships with any third partner organizations.

"In many cases, third party relationships are essential in enabling credit unions to become their members' primary financial institution," the agency noted in the Supervisory Letter which it first shared with examination staff in October. "While inadequately managed and controlled third party relationships can result in unanticipated costs, legal disputes, and financial loss, NCUA's role as a regulator and insurer is not to stifle the innovative use of third party relationships to meet member needs and strategic objectives. NCUA's goal is to ensure credit unions clearly understand risks they are undertaking and balance and control those risks considering the credit union's safety and members' best interests."

The letter, which the agency shared with federally insured CUs earlier this month, summarizes how federally insured credit unions should evaluate the risks of a third party relationship, perform due diligence in the relationships and monitor it for ongoing control.