LAS VEGAS — Speaking this morning at NACUSO's annual conference NCUA Board Member Gigi Hyland reassured attendees that the agency has safety and soundness in mind when it directs examiners to take a closer look at the third-party relationships that credit unions form to bring additional services to members.
"The process begins with how do you start evaluating vendors," Hyland said. "The due diligence process involves asking what direction are you going in and once the vendor is chosen, the contracts are critical."
Hyland acknowledged that credit unions have to partner with other entities to be able to meet their member's needs–"you can't do it alone." However, she cautioned that "some credit unions are so eager to get the service out the door" that some will go along with the contracts that are provided by the vendor.
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"With all due respect to the vendors, the contracts tend to favor the vendors," Hyland said.
Once the deal is sealed, the process doesn't end there, Hyland said. Credit unions must still monitor the relationship especially if the vendor is not providing the contracted services.
Hyland encouraged credits unions to keep the lines of communication open with examiners in their region.
"If you can explain what you do and what you don't do and the risks, the examiners will have better knowledge to work with," Hyland suggested.
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