The Mounting Regulatory Burden For Credit Unions

How CUSOs are getting creative to provide sources of income


The mounting regulatory burden that credit unions are facing under the rules of the National Credit Union Administration (NCUA), the Consumer Financial Protection Bureau (CFPB) and the Dodd Frank Act are stifling their growth and their ability to serve members. Due to some strict regulations not all credit unions can afford to accommodate these policies and are left pointing members in the direction of big banks. At this point the members incur extra costs and the CUs are losing out on potential revenue.

A 2012 NAFCU survey of association members showed that 94% of respondents saw a significant growth in their compliance burdens since the Dodd-Frank Act was effectively passed in 2010. Only a very small percentage of the surveyed group is claiming to have seen a positive result from the recent regulations.

The regulatory burden is also one of the biggest contributors to the decline in the number of credit unions over the last few years. Between 2009 and 2013 over 800 credit unions had to close their doors due to compliance related issues.

Nontraditional Solutions

Credit Union Service Organizations (CUSOs) are entities that were created to assist credit unions and their members. Today, with the mounting regulatory burden some CUSOs are starting to get more creative and inventive with the services they offer as credit unions seek nontraditional sources of income.

Some CUSOs are offering mobile services with lower rates, generating savings for members and income for CUs, while other CUSOs are focusing on payroll services, insurance brokerage or real estate brokerage.

At CU Revest we are helping turn lost money from charge-offs into a revenue source. Participating credit unions get to enjoy a cash flow payout from any collections that are made. The members who were originally charged-off get help the help they need to get back in good standing and regain their credit union membership.

If you are ready to earn back your lost members see how CU Revest works. To learn more about what CUSO services are allowed under NCUA regulations click here.

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Bela R Hawaii