The National Credit Union Association adopted amendments to regulations on indirect lending and leasing arrangements to members, "the purchase of loan participations and the purchase, sale, and pledge of eligible obligations and other loans (including notes of liquidating credit unions)." The final rule is intended to "provide additional flexibility for federally insured credit unions (FICUs) to make use of advanced technologies and opportunities offered by the financial technology (fintech) sector."
Key points of the new rule include:
- codifying supervisory guidance on third-party due diligence, changing the regulatory framework from prescriptive to principles-based;
- clarifying provisions regarding indirect lending and leasing, and granting credit unions flexibility to participate in loans acquired through indirect lending arrangements utilizing fintech advancements;
- removing certain restrictions and requirements for eligible obligations, allowing credit unions greater flexibility in purchasing their members' eligible obligations; and
- replacing previous limits with tailored policy, due diligence and risk management requirements aligned with each credit union's risk levels and activities.
This rule becomes effective 30 days after publication in the Federal Register.