A credit union’s relationship with a CUSO typically takes the form of one or more of the following:
| Entity | Description |
|---|---|
| Investor or owner | A credit union may own all or a portion of the CUSO, constituting an equity relationship (an investor credit union). Depending on the structure of the relationship, the credit union may be a shareholder (corporation), member (LLC), or partner (limited partnership). |
| Lender | A credit union may loan funds to the CUSO, constituting a debt relationship. |
| Client | A credit union may be a user of a CUSO’s services or a purchaser of products offered by a CUSO, constituting a vendor-client relationship. |
Federal law and regulations limit the role of FCUs with respect to CUSOs. For example, NCUA regulations limit the amount a FCU may invest in or loan to a CUSO and restrict FCUs to establishing relationships only with CUSOs that offer certain pre-approved services.
FISCUs will have varying restrictions on their relationships with CUSOs depending upon applicable state laws and regulations.
Last updated August 9, 2018
