Congress mulls third-party vendor authority
Published by: Sean Brown
June 15, 2022 | Government Affairs, Regulatory
While you look for new and innovative ways to best serve your members, Congress is looking for new and innovative ways to regulate emerging technologies and services. That’s why the League constantly scans the federal regulatory horizon for opportunities to champion credit union empowerment through tailored and common-sense regulation, like the recently-introduced H.R. 7022, or the Strengthening Cyber-Security for the Financial Sector Act of 2022. H.R. 7022 would infuse National Credit Union Administration, NCUA, with broad and direct third-party examination authority, including Credit Union Service Organization, CUSOs, and other consumer-facing vendors connected to credit union service offerings. While NCUA third-party examination could alleviate vendor due diligence processes and ease risk concerns, the legislation’s overly broad language must be tailored to focus more on vendors with large consumer data exposure and anti-money-laundering risk rather than partners that simply enable better member service. The League encouraged Congress to reconsider H.R. 7022 for more tailored NCUA third-party vendor examination towards data and risk as well as the need for continued credit union-driven third-party due diligence processes for partners and vendors posing less systemic risk.
H.R. 7022 is connected to an ongoing federal discussion surrounding third-party regulation. In May, the League commented on a request for comment from the Consumer Financial Protection Bureau, CFPB, related to its supervisory authority over certain nonbank-covered persons based on a risk determination. Once more, the League pushed for a narrowly tailored rule that levels the regulatory playing field for the truly unregulated cryptocurrency platforms, buy-now-pay-later service providers, and FinTechs, not the prudentially regulated credit unions and their strategic partners.
If you would like to learn more about the evolving third-party examination authority conversation, reach out and connect with either the League’s Director of Regulatory Affairs, Sean Brown, or Director of Legislative Affairs, Jared Weiser, for any questions or concerns.
Contact Sean Brown for questions or assistance.