7-9-59 - Credit union service organizations -- Limitations on providing services through other entities.
7-9-59. Credit union service organizations -- Limitations on providing servicesthrough other entities.
(1) This section applies to a credit union service organization in which a credit unionorganized under this chapter has an ownership interest.
(2) (a) A credit union service organization may provide a service only if the service is:
(i) (A) listed in Subsection (2)(b); or
(B) approved by the commissioner in accordance with Subsection (4)(b); and
(ii) (A) except for the extension of credit by the credit union service organization, limitedprimarily to:
(I) credit unions that hold an ownership interest in the credit union service organization;
(II) members of credit unions that hold an ownership interest in the credit union serviceorganization;
(III) members of credit unions that contract with the credit union service organization; or
(IV) credit unions that contract with the credit union service organization but do not holdan ownership interest in the credit union service organization; or
(B) for purposes of the extension of credit by the credit union service organization,limited to members of a credit union that holds an ownership interest in the credit union serviceorganization.
(b) Subsection (2)(a) applies to:
(i) the following checking and currency services:
(A) check cashing;
(B) coin and currency services; and
(C) services related to:
(I) a money order;
(II) a savings bond;
(III) a travelers check; or
(IV) the purchase and sale of United States Mint commemorative coins;
(ii) the following clerical, professional, and management services:
(A) accounting services;
(B) courier services;
(C) credit analysis;
(D) facsimile transmission and copying services;
(E) services related to conducting an internal audit for a credit union;
(F) locator services;
(G) services related to management and personnel training and support;
(H) marketing services;
(I) research services; or
(J) services related to a supervisory committee audit;
(iii) consumer mortgage loan origination;
(iv) the following electronic transaction services:
(A) automated teller machine services;
(B) credit card services;
(C) debit card services;
(D) data processing services;
(E) electronic fund transfer services;
(F) services related to electronic income tax filings;
(G) payment item processing;
(H) wire transfer services; or
(I) cyber financial services;
(v) the following financial counseling services:
(A) developing and administering personnel benefit plans including:
(I) individual retirement accounts;
(II) Keogh plans; or
(III) deferred compensation plans;
(B) estate planning;
(C) financial planning and counseling;
(D) income tax preparation;
(E) investment counseling; or
(F) retirement counseling;
(vi) fixed asset services related to the:
(A) management, development, sale, or lease of fixed assets; or
(B) sale, lease, or servicing of computer hardware or software;
(vii) the following insurance brokerage or agency services:
(A) operating as an agency for sale of insurance;
(B) providing vehicle warranty programs; or
(C) providing group purchasing programs;
(viii) the following leasing services:
(A) leasing of personal property; or
(B) real estate leasing of excess credit union service organization property;
(ix) the following loan support services:
(A) debt collection services;
(B) loan processing, servicing, and sales; or
(C) sale of repossessed collateral;
(x) the extension of credit including member-business loans;
(xi) the following record retention, security, and disaster recovery services:
(A) alarm-monitoring and other security services;
(B) disaster recovery services;
(C) services related to:
(I) microfilm;
(II) microfiche;
(III) optical and electronic imaging; or
(IV) CD-ROM data storage retrieval;
(D) providing forms and supplies; or
(E) services related to record retention and storage;
(xii) securities brokerage services;
(xiii) operation of shared credit union branch services, including service centers;
(xiv) student loan origination;
(xv) travel agency services;
(xvi) the following trust and trust-related services:
(A) acting as an administrator for a prepaid legal service plan;
(B) acting in a fiduciary capacity including as:
(I) trustee;
(II) guardian;
(III) conservator; or
(IV) estate administrator; or
(C) trust services; or
(xvii) making credit union service organization investments in noncredit union serviceorganization service providers.
(3) (a) One or more credit unions organized under this chapter may form a credit unionservice organization on or after the day on which each credit union forming the credit unionservice organization obtains in accordance with this section the approval by the commissioner forthe formation of the credit union service organization.
(b) To obtain approval from the commissioner for the formation of a credit union serviceorganization, each credit union that is forming a credit union service organization shall file anapplication with the commissioner that specifies:
(i) whether the credit union meets the capital and surplus standards established by rule bythe commissioner;
(ii) the services to be provided by the credit union service organization; and
(iii) any information required by rule by the commissioner.
(c) The commissioner may by rule establish the requirements for forming of a creditunion service organization to ensure that:
(i) the credit union service organization as formed:
(A) has the financial capacity to provide the services described in the applicationrequesting the formation of the credit union service organization in a safe and sound manner; and
(B) has the managerial expertise to provide the services described in the applicationrequesting the formation of the credit union service organization in a safe and sound manner; and
(ii) any potential harm that granting the approval may have on other institutions subjectto the jurisdiction of the department does not clearly outweigh the probable beneficial effect ofthe credit union service organization providing the services.
(4) (a) A credit union service organization may provide a service that is described inSubsection (2)(b) but not listed in the application requesting the formation of the credit unionservice organization by filing written notice with the commissioner at least 30 days before theday on which the credit union service organization first provides the service.
(b) A credit union service organization may provide a service not described inSubsection (2)(b) if:
(i) the credit union service organization files a written request for approval to provide theservice with the commissioner; and
(ii) the commissioner approves the credit union service organization providing thatservice.
(c) The commissioner may at any time limit the services engaged in by a credit unionservice organization on the basis of:
(i) a supervisory reason;
(ii) a legal reason; or
(iii) a safety and soundness reason.
(5) The commissioner may conduct examinations of a credit union service organization
in accordance with Section 7-1-314.
(6) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, thecommissioner may make rules for purposes of this section:
(a) defining what constitutes an ownership interest held by a credit union;
(b) specifying the information required to be included in an application seeking to form acredit union service organization;
(c) specifying in accordance with Subsection (3), the requirements for forming a creditunion service organization;
(d) specifying the procedure for obtaining approval to provide a service under Subsection(4)(a); and
(e) specifying the conditions under which a credit union service organization mayprovide a service described in Subsection (2).
(7) (a) Except as provided in Subsection (7)(b), a credit union may not provide anyservice to a member of the credit union through:
(i) a person who is controlled by or is under common control with the credit unionwhether or not the control is exercised:
(A) directly; or
(B) indirectly through one or more intermediary controls; or
(ii) an entity in which the credit union holds an ownership interest.
(b) Notwithstanding Subsection (7)(a), a credit union may provide services to a memberof a credit union:
(i) through a credit union service organization to the extent permitted by this section; or
(ii) through a loan production office to the extent those services are authorized bySection 7-1-715.
(c) Notwithstanding Section 7-1-103, for purposes of this section, "control" means thepower, directly, or indirectly, to:
(i) direct or exercise a controlling influence over:
(A) the management or policies of an entity; or
(B) the election of a majority of the directors or trustees of an entity;
(ii) vote 20% or more of any class of voting securities of an entity by an individual; or
(iii) vote more than 5% of any class of voting securities of an entity by a person otherthan an individual.
(d) Nothing within this section may be interpreted as prohibiting a credit union fromentering into a contract or agreement to provide services to members of the credit union if theperson with whom the credit union enters into the contract agreement is not a person described inSubsection (7)(a).
(8) (a) A credit union holding an ownership interest in a credit union service organizationoperating on May 5, 2003 is not required to file an application requesting to form that creditunion service organization.
(b) A credit union service organization operating on May 5, 2003:
(i) shall provide the commissioner written notice of the services the credit union serviceorganization provides by no later than July 1, 2003; and
(ii) may provide a service not described in Subsection (2)(b) on or after July 1, 2003 onlyif the credit union service organization has obtained approval from the commissioner inaccordance with Subsection (4).
Amended by Chapter 382, 2008 General Session