Federal credit unions should do due diligence when finding third parties to offer non-deposit investment products and have a written agreement that carefully spells out the terms of the brokerage arrangement.

That's part of the advice contained in the NCUA's Letter to Federal Credit on Sales of Nondeposit Investments. It was sent to federal credit unions this week.

The credit union may fully or partially own a CUSO that provides those products or use a shared employee arrangement with a third-party brokerage firm or the credit union may act as a finder and earn income from that activity.

The credit union's policies should describe the features of the sales program, outline the responsibilities of the credit union and the third-party broker, have a contract with the broker that indemnifies the credit union from monetary damages, and outline the roles of credit unions, brokers, and any shared employees, the location of nondeposit sales and the use of credit union member information.

The letter supersedes the agency's previous letter, which was issued in 1993, to reflect changes in laws and in agency policies.

To see the letter, go to: http://www.ncua.gov/news/express/xfiles/10-FCU-03.pdf