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NCUA Regulator says Third-Party Links Being Watched

TEMPE, Ariz. - NCUA's regional director in the West is urging "due diligence" when it comes to dealing with third-party vendors and controlling risk. Considering the increased "partnerships" and outsourcing arrangements CUs have undertaken in recent months, the industry should pursue the new product offerings with a degree of caution,...

By Staff Writer | Updated on September 28, 2004

TEMPE, Ariz. – NCUA’s regional director in the West is urging “due diligence” when it comes to dealing with third-party vendors and controlling risk. Considering the increased “partnerships” and outsourcing arrangements CUs have undertaken in recent months, the industry should pursue the new product offerings with a degree of caution, declared Melinda Love, NCUA’s Region Five director. In an interview with Credit Union Times, Love cited indirect and subprime loans plus technology ventures as examples of third party packages that require careful scrutiny as some CUs experience “difficult times” facing a margin squeeze on rates and higher expenses. “Credit unions need to make sure they are properly managing their new relationships with third-party vendors,” said Love without detailing any specifics but adding that third party relationships remain an area the agency “is putting more emphasis on this year.” The Arizona-based regulator said some of the third party packages with CUSOs and the like have become more “complex” with many new procedures to follow. Thus proper controls and policies need to be in place. Love, an examiner since 1986, moved to Tempe from Chicago following NCUA’s Region reorganization.

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