2 minutes
What are regulators' expectations and how can credit unions best meet them?
Managing credit union vendor relationships continues to be complicated for two reasons. One is the increasing complexity of the vendor relationships themselves. Credit unions need to work with a variety of vendors, and sometimes even hire vendors that rely on other vendors to support a particular function or member service. The second reason vendor relationship management is tricky is increased and changing regulator scrutiny of vendor relationships; what is OK during a CU’s current exam might not be OK during the next one.
And there’s no question that it’s not easy to ascertain whether an outside provider is truly compliant. The six documents below come editor-recommended for being content rich. Hopefully, reviewing them will help you discern the lay of the land in the vendor compliance management arena (including the key role of the Consumer Financial Protection Bureau)—and help you develop thoughtful steps you can take with your vendor compliance management efforts.
Articles about the Regulatory History
“A Significant Change in the Regulatory Oversight of Third-Party Relationships”
By John ReVeal and Judie Rinearson of the Bank Bryan Cave law firm
In recent years it has become quite obvious that the bar has been raised on how banks relate to their third-party processors, program managers and other service providers.
Guidance from Specific Regulators
“CFPB Bulletin: Service Providers (April 13, 2012)”
This bulletin outlines CFPB’s position on its authority over and its expectations of companies that provide services to financial institutions.
CFPB press release about the April 13, 2012, bulletin
Federal Financial Institutions Examination Council guidelines on Financial Technology Providers (October 2012)
Office of the Comptroller of Currency’s bulletin about third party relationships (October 2013)
Federal Reserve Board of Governors’ “Guidance on Managing Outsourcing Risk” (December 2013)
Federal Deposit Insurance Corporation’s Supervisory Approach to Payment Processing Relationships With Merchant Customers That Engage in Higher-Risk Activities (Revised July 2014)
Tools for Deciding on Action
How to negotiate well with vendors.
Tech Time: Six Outsourcing Truths That Vendors Won’t Tell You
The 3 Steps You Must Take to Ensure CFPB Compliance
This white paper from RSM includes on p. 7 a tool for assessing where your credit union is in its efforts to comply.
