The NCUA recently reiterated that guidance on best practices involving third-party brokerage arrangements is just that and does not carry the force of formal regulation.
In a Feb. 11 letter, NCUA General Counsel Robert Fenner responded to NACUSO regarding the regulator's 10-FCU-03 letter to federal credit unions on the sales of nondeposit investments. NACUSO had expressed concerns that the NCUA's guidance requires credit unions to perform duties outside the scope of their expertise and to interpose themselves in broker-dealer compliance issues.
"As a preliminary matter, you should note that 10-FCU-03 is guidance recommending best practices for FCUs involved in third-party brokerage arrangement. Indeed, the first sentence expressly states 'the purpose of this letter is to provide guidance to federal credit unions on the establishment and operation of third-party brokerage arrangements for the sale of nondeposit investment products.' The letter does not impose regulatory requirements on FCUs," Fenner wrote.
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